The Steve Cohen Era Is Over: S.A.C. To Plead Guilty To Securities Fraud, Stop Managing Outside Money

Tyler Durden's picture

Nearly three years ago, before anyone had heard of expert networks, before the SEC had brought any major enforcement action against any hedge fund and long before anyone had to gall to accuse SAC of insider trading, Zero Hedge started a series of posts commencing with "Is The SEC's Insider Trading Case Implicating FrontPoint A Sting Operation Aimed At S.A.C. Capital?" exposing the fraudulent transactions of Steve Cohne's hedge fund despite fears of violent legal reprisals. We are delighted to inform our readers that this particular chapter is now over: the WSJ has just reported that SAC will plead guilty to securities fraud, pay a final $1.2 billion penalty (still a tiny sum compared to all the ill-gotten gains by Steve Cohen over the years), and most importantly, end the fund's management of outside money.

From the WSJ:

SAC Capital Advisors LP will plead guilty to securities fraud as part of a landmark criminal insider-trading settlement with federal prosecutors set to be announced by next week, people familiar with the discussions said.


The exact timing of the pact isn't set, and if final details are ironed out quickly, it could still be unveiled by the end of this week, these people said.


SAC, run by Wall Street titan Steven A. Cohen, also will agree to stop managing outside money and pay the government criminal penalties of about $1.2 billion, according to these people—which would be the largest-ever insider-trading penalty.




A spokeswoman for the Manhattan U.S. attorney's office, Jennifer Queliz, declined to comment, as did SAC spokesman Jonathan Gasthalter, Federal Bureau of Investigation spokesman J. Peter Donald and SEC spokeswoman Judy Burns.


After any settlement is approved, Mr. Cohen would remain under criminal investigation, though no charges are expected against him barring unexpected developments in the probe, the people said.

And since in the hedge fund world the bulk of "retained earnings" comes not from capital appreciation, manipulated, centrally-planned markets or not, but from charging outside investors the exorbitant privilege of 2 and 20 or, in SAC's case 3 and 50, the Steve Cohen era is now effectively over.

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ejamest's picture

Long live the King

Say What Again's picture

What's the ballpark figure for the notional amount that needs to be liquidated?

redpill's picture

How much jail time? 


That's what I thought.

Pladizow's picture

Sooooo, he'll keep on inside trading for himself and Washington?

BKbroiler's picture

buying that picasso was his downfall

Running On Bingo Fuel's picture

I'm sure he'll have a severe diabetes illness that requires 24/7 monitoring by his 3 nurses imported from Scores. Like the obese indian.


Groundhog Day's picture

no jail time and the fucker walked away with billions.  The only justice would be to strip him and his family of everything, make them live in section 8 housing and work at mcdonalds.  Nothing else is even close to fair.

Blankenstein's picture

Throwing him in a maximum security prison in the general population for the next 40 years would also work. 

buzzsaw99's picture

Keep loot, no jail time. Corzined again bitchez.

Seasmoke's picture

Don't feel bad for the Tribesman. 

emersonreturn's picture

thank you ZH, for this and a thousand other stories you've highlighted.

Rainman's picture

...and dude gets no jail time. Is this a great country or what ??...who was the asshole who said crime don't pay..?

outamyeffinway's picture

See, no one even remembers his name. Asshole.

vxpatel's picture

Wonder who he forgot to pay off????

Pladizow's picture

The problem arises when those you want to pay off, have already been bought!

fooshorter's picture

The title of this article should be: Lets All Give Steve a big hand for a Job well done! Mission Accomplished!


Just remember Steve don't be late on those illuminati dues, next time you might actually get convicted! 


/knee slapping belly laugh





Tim Knight from Slope of Hope's picture

At least he's still got his good looks.

stinkhammer's picture

Jackie Treehorn wants to see you, deadbeat

NOTaREALmerican's picture

Haven't the job creators suffered enough?!   

We need to just forgive and forget.  

Iam Yue2's picture

Congratulations Zerohedge on a great piece of hounding Journalism.

You put the tame and compliant financial press to shame.

missingtrillions's picture

Prem Watsa and Patrick Byrne have long been fighting the good fight to expose this clown for the criminal he is. 

Dr Benway's picture

These "negotiated penalties" for major criminals reminds me of when Pablo Escobar negotiated a term in his own private "prison" where he could come, go and murder as he please.


The financial criminals are now more powerful than the judicial system. They should be happy Cohen deigned to give them even a small chunk of his profits, they can pretend they won now.


And ooh what an awesome deterrent this is. Steal billions? Worst case scenario, keep almost all your ill-gotten gains.

Rainman's picture

Think of negotiated penalties as a form of toll ...I always wanted to own a toll road.

Randoom Thought's picture

So is Stevie Cohen going to be cast into hell for 1000 years?

jballz's picture



he is innocent.


that is all.

salvador's picture

I'd like to know how much money Scaramucci has made investing in SAC.  


I'd also like to know what percentage of Scaramucci's investors' money was in SAC - in other words, how much of Scaramucci's success (money/performance) has been dependent upon Cohen.


Those seem to be fair questions for other CNBC commentators to ask Scaramucci.

RaceToTheBottom's picture

I believe he had already said that he would be closing down his managing public money side.

Therefore he gets no downside.

Why not give him the key to the city?

PontifexMaximus's picture

Where does the USD 1.2 bill. penalty go to? So, praise Stevie, he did God's work, helping the poors.

tradewithdave's picture

You didn't convict that.

venturen's picture

Is this like a bank robber saying he is giving up robbing banks and just keeping the illicit gains well except the customary tip for enables. Does he still have to send MARY Jo, Gensler, Eric  and Ben a hanukkah card?

ebworthen's picture

Once again no one in jail and sacrificing a small portion of their gains to escape justice.

Imagine thugs who beat up old Ladies for their S.S. and give the cop $20 to walk.

That is what we have in the U.S.

Where is Jon Corzine?

Budd aka Sidewinder's picture

Excellent future prospects as a bundler for Obama's run at a self mandated 3rd term.  (He can't leave with Obamacare not implemented and if you think that's going to get done before 11/2016 you're insane.  Those fuckers probably won't even have the website running by then)

Downtoolong's picture

SAC Capital Advisors LP will plead guilty to securities fraud…Mr. Cohen would remain under criminal investigation, though no charges are expected against him.

I see. So tell me, which prison will the SAC Logo be locked up in for life?

IndyPat's picture

Martha Stewart went to the pokie, but fucks like this walk away with the stolen money?

Constitutional Republic's picture

I still want criminal prosecutions, and use of RICO in particular. However, well done ZH. I admire your foresight and fortitude. Patience is a virtue, but it takes too damn long :-)

Constitutional Republic's picture

This is what happens when the fine and censure are merely considered the cost of doing business - to be deducted from the greater sums made by fraud and criminal behavior.

That's not a deterrent. It's an encouragement to Cohen and his sort who will laugh all the way to the bank, and tell anyone who listens how they beat the system, and they are smarter, richer, better connected than honest businessmen who DON'T have dual passports.

Notarocketscientist's picture

If I am a fund manager I am looking at this and saying 'fuck ya - let's keep on insider trading'

bugs_'s picture

Whats the worst that can happen?

tpgaynor's picture

Wow!!bet he and his traders are singin that Crosby,Stills, Nash, and Young tune "Teach your children well"....  with a follow up course like an ode to Lou Reed..."and the color'd girls go do ta do da do..."




Trimmed Hedge's picture

I'm tired of this shit..

Perhaps it's time for some Zero Hedger justice...