SAC Capital Advisors has told investors that it will no longer cooperate "unconditionally" with the US government’s insider trading investigation.
In a brief letter to investors, Steven A. Cohen’s US$15 billion hedge fund, reportedly, said it believes the next few months will be critical in the investigation, but did not give any further details.
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The letter, reportedly, also said that the hedge fund may not be able to give frequent updates to investors, and going forward will "need to keep details confidential", even though SAC believes in transparency.
So far, nine current or former SAC employees have been charged with or implicated in insider-trading while working at Cohen’s fund.
While SAC came close to settling a suit against it by the US Securities and Exchange Commission (SEC) for not adequately supervising its employees. SAC and the SEC reached a settlement agreement for US$616 million, but unconditional approval to the proposal was not granted by the judge on the case.
In March 2013, Michael Steinberg, the most senior employee of SAC, was charged with insider trading, but he pleaded not guilty to five counts of conspiracy and securities fraud. Steinberg has been on paid leave after his suspension from SAC Capital’s Sigma Capital division last year. His criminal trial will begin on November 18.
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By GlobalDataCohen also recently told investors that the hedge fund would "claw back compensation from employees who are found to use illegally obtained information in making trades" at the beginning of 2014.
Following the November 2012 arrest of Mathew Martoma, a former portfolio manager at CR Intrinsic Investors, one of SAC’s funds, SAC, reportedly, began changing the terms of its redemption policy.
The hedge fund has already extended the deadline for submitting redemption requests to 3 June from 16 May. SAC’s letter to investors comes a few weeks before outside investors have to notify Cohen and his fund whether they intend to redeem some of their money before the end of the second quarter on June 30.
In the first quarter of 2013, outside investors submitted notices to redeem up to US$1.7 billion.
