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NY judge sentences SAC Capital in $1.8B fraud deal

Published on NewsOK Modified: April 10, 2014 at 1:46 pm •  Published: April 10, 2014

NEW YORK (AP) — The once high-flying hedge fund SAC Capital was sentenced on criminal fraud charges Thursday under a $1.8 billion deal that prosecutors say included the largest criminal fine ever imposed in an insider trading case.

U.S. District Judge Laura Taylor Swain in Manhattan formally administered the sentence on Stamford, Conn.-based SAC Capital LP and three related entities based on pleas last fall by the companies to wire fraud and securities fraud.

"These crimes clearly were motivated by greed," Swain said.

The judge said nearly $400 million earned illegally by one of the companies was a "staggering amount" reflecting a corrupt corporate culture

In a statement, U.S. Attorney Preet Bharara said: "Today marks the day of reckoning for a fund that was riddled with criminal conduct."

The government said the majority of money managed by the defendants from 1999 through 2010 belonged to the hedge fund's billionaire owner and founder, Steven A. Cohen. It noted eight employees were convicted of insider trading.

Assistant U.S. Attorney Antonia Apps told Swain that a $900 million fine was believed to be "the largest fine imposed in an insider trading case in history." In court papers, prosecutors called it an appropriate punishment that sends a "strong message of deterrence" to potential insider traders.

Representing the companies, longtime SAC General Counsel Peter Nussbaum told Swain the companies "accept responsibility for the misconduct of our employees."

At the sentencing's outset, drugmaker Elan Pharmaceuticals announced it had settled its $1.5 million claim against SAC for costs related to the probe. Some insider trading secrets involved a potential breakthrough Alzheimer's drug trial Elan co-sponsored.

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