SAC, prosecutors strike formal deal to keep firm going
By Erin Geiger Smith
NEW YORK (Reuters) - A U.S. judge on Friday approved an agreement between Steven A. Cohen's hedge fund, SAC Capital Advisors, and federal prosecutors to allow the hedge fund to continue to operate while the criminal case against it proceeds.
Manhattan federal Judge Richard Sullivan issued a protective order that requires SAC to hold on to the vast majority of the assets it manages for Cohen.
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 has been widely expected since Manhattan federal prosecutors filed criminal charges and a civil asset forfeiture claim against the $14 billion fund last month, but it required approval of the judge presiding over the asset forfeiture case.
The order, the court said, serves to preserve the availability of SAC property for civil forfeiture while avoiding undue interference with the legitimate operations of SAC.
The agreement, approved by the judge, requires SAC to maintain 85 percent of the assets held by the firm's management company. A source told Reuters earlier Friday this requirement meant that SAC needed to refrain from disbursing Cohen's money, not the money belonging to outside investors.
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. Continued...