NEW YORK (AP) — A federal prosecutor says the federal government has effectively shut down a hedge fund giant with a deal requiring it to plead guilty to criminal fraud charges and pay a record $1.8 billion, proving that no financial institution is "too big to jail."
U.S. Attorney Preet Bharara announced the deal with SAC Capital Advisors and related companies on Monday, saying it must be approved by federal judges in Manhattan before "the largest fine in history for insider trading offenses" takes effect. A plea hearing in the case was set for Friday.
Bharara also emphasized that the agreement does not resolve current or potential cases that might be brought against any individuals, including SAC Capital Advisors billionaire founder Steven A. Cohen.
"There is no immunity from criminal prosecution for any person," he said, though he added that individual guilt is not the government's only mission.
"Sometimes, blameworthy institutions need to be held accountable too. No institution should rest easy in the belief that it is too big to jail," Bharara said.
He said an independent expert will be assigned to the SAC companies during five years of probation to ensure no insider trading occurs as the companies wind down their businesses.
The company will pay a $900 million fine and forfeit another $900 million to the federal government, though it can exclude $616 million that SAC companies have already agreed to pay to settle parallel actions by the U.S. Securities and Exchange Commission.
The government in a letter to federal judges called the penalties "steep but fair" and "commensurate with the breadth and duration of the charged criminal conduct."
Early Monday afternoon, SAC Capital said in a statement: "We take responsibility for the handful of men who pleaded guilty and whose conduct gave rise to SAC's liability. The tiny fraction of wrongdoers does not represent the 3,000 honest men and women who have worked at the firm during the past 21 years. SAC has never encouraged, promoted or tolerated insider trading."
Later, the company softened its statement, subtracting "tiny fraction" and replacing the last sentence with a more remorseful tone: "Even one person crossing the line into illegal behavior is too many and we greatly regret this conduct occurred."
In a statement, FBI Assistant Director George Venizelos said SAC Capital's plea demonstrates "that cheating and breaking the law were not only permitted but allowed to persist."
Bharara said the criminal investigation continues.
Cut pounds of stomach fat every week by using this 1 weird old tip.