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SAC Unit CR Intrinsic To Pay Largest Ever Insider Trading Case Settlement: No Charges Are Admitted Or Denied
From the SEC:
The Securities and Exchange Commission today announced that Stamford, Conn.-based hedge fund advisory firm CR Intrinsic Investors has agreed to pay more than $600 million to settle SEC charges that it participated in an insider trading scheme involving a clinical trial for an Alzheimer’s drug being jointly developed by two pharmaceutical companies.
The SEC charged CR Intrinsic with insider trading in November 2012, alleging that one of the firm’s portfolio managers Mathew Martoma illegally obtained confidential details about the clinical trial from Dr. Sidney Gilman, who was selected by the pharmaceutical companies – Elan Corporation and Wyeth – to present the final drug trial results to the public.
The settlement filed today in federal court in Manhattan is the largest ever in an insider trading case, requiring CR Intrinsic – an affiliate of S.A.C. Capital Advisors – to pay $274,972,541 in disgorgement, $51,802,381.22 in prejudgment interest, and a $274,972,541 penalty.
“The historic monetary sanctions against CR Intrinsic and its affiliates are sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm,” said George S. Canellos, Acting Director of the SEC’s Division of Enforcement.
Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office, added, “A robust culture of compliance and zero tolerance toward employee misconduct can help other firms avoid the severe financial consequences that CR Intrinsic is facing for its misconduct.”
The SEC’s complaint against CR Intrinsic, Martoma, and Dr. Gilman alleged that during phone calls arranged by a New York-based expert network firm for which Dr. Gilman moonlighted as a medical consultant, he tipped Martoma with safety data and eventually details about negative results in the trial about two weeks before they were made public in July 2008. Martoma and CR Intrinsic then caused several hedge funds to sell more than $960 million in Elan and Wyeth securities in a little more than a week.
In an amended complaint filed today, the SEC added S.A.C. Capital Advisors and four hedge funds managed by CR Intrinsic and S.A.C. Capital as relief defendants because they each received ill-gotten gains from the insider trading scheme. These ill-gotten gains are comprised of profits and avoided losses resulting from trades placed in the hedge fund portfolios that CR Intrinsic and S.A.C. Capital managed, and include fees that S.A.C. Capital received as a result of these ill-gotten gains.
The settlement is subject to the approval of Judge Victor Marrero of the U.S. District Court for the Southern District of New York. The settlement would resolve the SEC’s charges against CR Intrinsic and the relief defendants relating to the trades in the securities of Elan and Wyeth between July 21 and July 30, 2008. The settling parties neither admit nor deny the charges. The settlement does not resolve the charges against Martoma, whose case continues in litigation. The court previously entered a consent judgment against Dr. Gilman requiring him to pay disgorgement and prejudgment interest, and permanently enjoining him from further violations of the anti-fraud provisions of the federal securities laws.
The SEC’s investigation, which is continuing, has been conducted by Charles D. Riely and Amelia A. Cottrell of the SEC’s Market Abuse Unit in New York, and Matthew J. Watkins and Neil Hendelman of the New York Regional Office. The case has been supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority (FINRA).
Key line above: "The settling parties neither admit nor deny the charges." And that, ladies and gentlemen, is how you make billions with insider trading, and "settle" it for the millions you get caught on. And of course, nobody actually goes to prison.
We can only assume this means Stevie Cohen is now off the hook, and this wristslap will guarantee he, together with GETCO, the Fed, a few other remaining hedge funds, and the Primary Dealers (who are all that's left in this market) will continue levitating stocks to infinity.
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So what happens to Martoma?
“The historic monetary sanctions against CR Intrinsic and its affiliates are sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm,”
We just wont hold any of the actual employees that did the illegal activities to receive bonuses from said benefitted firm accountable
Thats because corporations is people, too!
We knew no Jews were going to jail, but no Indians either?? Amazing.
Obviously they're in violation of EOE laws since they don't have any minorities to prosecute.
No admissions. That means they are innocent and can do it again. Right?
Free Martha Stewart..., oh wait.
i'm shocked it took this long in the comments to bring this up......what a fucked up world we live in, saving yourself ~$50K in looses results in jail, conspire to make millions and........crickets.
carry a few grams of pot...5 years in prison. Rip off the public, lie, cheat with insider trading, accounting fraud..a fine..GOVERNMENTS HAVE TO GO..
Fines for killing a cheater from a royally protected tribe
used to be heavy. Because The Minority was chartered to do the dirty work against the majority in exchange for protection, you would not be let off against some silver but penalized heavily and parted with a gold coin. Needless to say , commoners got hanged for the same misdemeanor.
"I never buy, I never sell, and I never refuse." 1982 Abbie Hoffman, after finally beating the body snatchers... then they came back.
Canellos had to hurry, he's invited to a weekend party with Cohen
Box Score:
citizen: -0
oligarch: infinity and beyond!
their money is needed much more than personal accountability it seems these days.
Long as da sherrif get he cut, things be nice and peaceable round here.
We'll worry about that moral and ethical deficit later, right now we got the budget thingamajig to deal with FFS.
pass the lobster
Hey, NOTHING happens to comunist bastards like this.
Ever..
Part of the plan.
Forget the fiat money fines.
Put these CRIMINALS in jail, sieze their shit, and this type of stuff will stop or severly reduce.
this is off topic, but if anyone was watching cnbc a couple of minutes ago, bob pasani pretty much said , to buy citi before the close, and sell xom and pfe.
he said due to the rebalancing, citi has stock to buy, while those have stock to sell.
Round up all the jews on Wall St & force them to eat jelly bagels while the rest of the plattoon does push-ups...
~~~
That's the only way to instill proper discipline in this unit...
Dr. Gilman
give it time. it's coming. again. the fema camps are open for business.
that's why the jews are, and are made, so visible. again. so the real clique behind them can get away. again. and you are helping "their" cause. looking at you pope francis.
$600 million fine! Wow so we'll all be gettin checks from that soon? What's that....you're tellin me it just goes right back into the criminals pockets?
Dammit!!
Gotsta cover that 85 billion Fed tab.
A tribute to Martha Stewart: Fuck you you captive Wall Street scumbags!
Insider trading = efficient capital markets [and sometimes "opportunity realized"]
So..., where can I rob a bank, and the worst they can do to me is pretend nothing happened, and I'll return a little dab of the money?
Tell them you have early stage Alzheimer's and believed you were a customer of that bank and was only making a withdrawal. They'll understand.
Would a note from my Mom help? Because she has good days and bad days...
Bad Kaiser..., she'll have a good day, and then where will yo sorry ass be?
Ooooh Carl Levin is gonna be so mad and yell some stuff and then get a sandwich...
He'll also adjust his glasses so they're right at the end of his nose, 'cause it makes him look all serious and shit.
this bazarro world can't go on forever.....
can it?
Knukles aimlessly wandering along, hands clasp behind back, softly whistling sweet melodies, serene thoughts of odd things, apying no attention......
Four years ago, I thought it would all be over within two years.
Four years from now, I'll probably still be thinking it will all be over within two years.
its only cheating if u get caught. if youre not cheating youre only cheating yourself
"you ain't cheatin you ain't trying." absolutely true. This is a STAGGERING amount of money to "disgorge" as well. If the best that can be said of your (illegal) firm is "you're only as good as your (last) illegal trade" then clearly the VERY material movement OF capital FROM capital while "not the head shot" all us here in the cheap seats are looking is definitely a devastating blow. The obvious question of course is not "why are they still in business" but "just WHO is still doing business with..." and I'll let the rest of you all fill in that blank. As Captain Kirk said to "Commander Klingon Vessel"..."we are engaging transporters" (as in come on aboard cuz we're outta here) "now."
Civil Judgements mean nothing to these financial crooks. We need to 'draw and quarter ' a few of them.
That will send a clear message!
Wow. The SEC said to SAC, "carry on". They put them in the same category as the TBTF banks. Here's a hypothetical phone call to the SEC from the White House, Treasury, and/or the Fed: "SAC going out of business would have an adverse affect on the markets, and thus the economy, therefore, leave them the fuck alone".
correction: "would have an adverse affect on our campaign contributions"
Where's the other half of the article,
with the jail sentences?
You'll find that in the 'Fiction' section of the Zero Hedge library.
Lets see, make 5 billion, pay a 600 million fine...
Meh... nothing more that the tax rate on carrried interest....
Now if you fined the fuckers such that a Hedgie had a couple of million left from a billion of ill-gotten gains you might be on to something...
Please remember that the $600 million fine will be treated as an operating expense and thus deductible for tax purposes. As a taxpayer, I'm just glad I can help ease that burden.
And will likely be partially insured under the D&O and E&O policy
Steal a few $ and you're a criminal, steal a few billion$ and you're an industrialist.
Screw financial penalities altogether. It doesn't work. It can't work. The penalty is just a "RISK." It's an opportunity cost already factored in... If billions can be stolen by shuffling paper and pressing buttons, the penalties can be paid the exact same way.
If these pussies have assholes too tight for jail... then give Corzine 25 to life away from CREDIT ACCESS. OMFG! Those complicit and/or accessories required to conduct ALL BUSINESS/purchases on a "FREEDOM" visa-typecard, with an $5k "limit."
ALL purchases available for viewing on a People.gov website.
No warrant necessary for the public to see if cat food is on his menu. Suspicion of caviar would be enough for any local sheriff to verify what's in his fridge.
HUSH MONEY!
Hey, fraud is good business for Government and Regulators, alike, so don't think for a second they want this corruption to end. Its a great revenues source and provides money for more regulators to shake down the street year after year. Not one penny will go to the people.
If they want to send a message, they should not just fine them, but shut'm down and inflict such personal restrictions on these dopes that any one of them will have to think twice about before even entering into an ATM transaction.
These slime buckets have ruined the markets for everyone.
I regularly pay fines and penalties for infractions that I never committed. It's my way of giving back to the state.
Just another business expense.
"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time, a legal system that authorizes it and a moral code that glorifies it."
Frederick Bastiat, 1850
"Ask not what your country can do for you, ask what you can do for your government." - Adolf Hitler
Like Mark Cuban said " never buy a stock without inside information" .
Time for the rope and lampost thing... again... nothing else will satisfy.
"Whew! $600M- lemme cut you guys a check- hang on a sec..." -Steve Cohen...
Douchbag
A Hedge Fund Too Big to Jail - a Truly momentous occasion in the history of the law and finance.
Just another shakedown for the completely arbitrary trading on knowledge Laws (for you oliver Stone, Rudy Guiliani childish retards: "insider trading").
It's not a crime. It can never be proven. And the law is straight out of a Kafka novel. AND it harms absolutely no one.
So the government accepts bribes to allow firms to break the law.
You have now earned your Phd in government science.
"The settling parties neither admit nor deny the charges."
If this were a porno movie that statement above would be called "the money shot" simply because it prevents self incrimination with regard to private lawsuits.
Saves them a boat load of money in the long run.
Fraud its what everyone is doing............Even the Drs. want in it on it now !
So, in a true free-market exchange, is there such a thing as insider trading? In the business world having contacts is a big part of success. But in the investment world having contacts makes you a criminal? That's silly if you ask me.
With just the audio I thought it was Greenspan talking
Maybe this is just low brow fringe thinking, but shouldn't these fines be at least equal to the total amount in ill gotten gains plus more for the punishment end of it. Anything short of that is not justice financial or otherwise.
The SEC can spin that shit anyway they want but paying a fine is in essence admitting guilt in a Bill Clinton define blow job type of way.
All hail our new Banana Mob Democracy. Fuck the rule of law- we want fine money.
Fraud is the new business model.
Insider trade a thousand times a day for decades then get caught one time and pay a slap on the wrist fine. Business as usual in freedumb's land.
And once more we see how the SEC will get funded in the future.
Obviously you can't throw them in jail. Otherwise, who will pay the funding fines in the future?
dog & pony
dog & pony
dpg & pony
buy silver
Another interesting side to this constant corruption is these investors or bankers or whatever we choose to name them seem to continue with their criminal acts with only the fear of fines appraised to them as penitence for their immoral behavior. The seeming abetting of the criminal acts would lead one to believe that they are somehow paying off or bribing prosecuting attorneys and DA's to avoid jail time, but when you think about it the government is allowing the crimes to go unpunished as long as they get a cut of the take. It's not as though those who actually were defrauded are compensated. I would be curious to know where these fines go, to the general revenues or to specific law enforcement funds. This is similar to the suits placed against what are determined to be illegal trade "dumping". Those suites are about damage to US manufacturers, but do you think they get any of the proceeds, even after they invested money into pursuing legal actions in the first place. Just another government perpetrated fraud.
Dear SEC,
As discussed, we neither did nor didn't do anything wrong.
Here's a check for $600,000,000 just to prove that we neither did nor didn't.
Thanks and have a great day.
Hugs and Kisses,
SAC Capital
No perp walk for Mr. Cohen?
http://i.imgur.com/kqDrp.jpg
How many lesser scofflaws have been in jail for far more minor offenses....
http://i.imgur.com/h2Mya.png
This "neither admit nor deny" bullshit is what's wrong with the SEC. Put some motherfuckers in jail if the crime they committed is worth a $600,000,000 sanction. You can't deduct a federal fine, but you can deduct a negotiated settlement --- so who pays, the taxpayer. We are all reaching into our pockets to pay SAC's fines. It's like the fine for citibank: please pay $500,000,000 for your part in creating the tech bubble --- bummer, that dinged our quarter. Assholes. You wanna deter them, hurt them. Put them in prison or make em pay $6,000,000,000.