SAC, prosecutors strike formal deal to keep firm going

Fri Aug 9, 2013 12:44pm EDT
 
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By Emily Flitter

NEW YORK (Reuters) - Lawyers for Steven A. Cohen's hedge fund, SAC Capital Advisors, reached a formal agreement with federal prosecutors to allow the hedge fund to continue to operate while the criminal case against it proceeds, according to a source briefed on the matter.

According to the source, SAC will be required to hold on to the vast majority of the assets it manages for Cohen. The source declined to speak on the record because the agreement has not yet been approved by a judge.

Though the firm is operating normally, several employees were leaving on Friday as investor redemptions reduced the size of the workforce SAC will need.

The agreement, which has been widely expected since Manhattan federal prosecutors filed criminal charges and a civil asset forfeiture claim against the $14 billion fund last month, still needs approval by the judge presiding over the asset forfeiture case.

When SAC was indicted on July 25, the firm quickly released a statement saying it was working on a formal agreement with prosecutors to keep trading.

Prosecutors that day filed a parallel civil forfeiture action against the firm, seeking penalties for money laundering and arguing illegal profits the firm allegedly reaped from insider trades had tainted the assets with which they were commingled.

SAC has pleaded not guilty. Lawyers for the firm did not respond to requests for comment.

The firm, which recently managed as much as $6 billion in funds for outside investors, has been returning money to investors who requested it through redemptions.   Continued...

 
An exterior view of the headquarters of SAC Capital Advisors, L.P. in Stamford, Connecticut, in this picture taken December 13, 2010. REUTERS/Mike Segar