SAC's Cohen wins partial dismissal of ex-wife's fraud lawsuit

Mon Jan 27, 2014 1:55pm EST
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By Joseph Ax

NEW YORK (Reuters) - Steven A. Cohen's ex-wife, who accused the billionaire hedge fund founder of hiding $5.5 million during their 1990 divorce, can pursue fraud claims against him but cannot go after him for racketeering, a federal judge ruled on Monday.

U.S. District William Pauley in New York dismissed civil racketeering claims against Steven Cohen, the founder of SAC Capital Advisors, but said Patricia Cohen's claims of fraud and breach of fiduciary duty would go forward.

In doing so, Pauley noted each side's "seemingly inexhaustible legal resources" as one of the unusual circumstances that have transformed what would otherwise be a mundane marital dispute into a years-long litigation battle.

The legal fight, which began with Patricia Cohen's request for increased child support in 1991, has lasted more than twice as long as the marriage, the judge noted.

"This is a case to restore faith in the old-fashioned idea that divorce is something that lasts forever," Pauley wrote.

Joshua Dratel, a lawyer for Patricia Cohen, said in an email, "Ms. Cohen is grateful for the court's ruling and looks forward to the case moving forward."

A spokesman for Steven Cohen, Jonathan Gasthalter, said Cohen was pleased that the judge dismissed the racketeering claims and added, "We will continue to defend against her equally specious fraud and breach of fiduciary duty claims."

The lawsuit, filed in 2009, has proceeded as prosecutors have focused on the extent employees at Cohen's hedge fund had engaged in insider trading. Six have pleaded guilty, while the seventh, former portfolio manager Michael Steinberg, was convicted at trial in December.   Continued...

Hedge fund manager Steven A. Cohen, founder and chairman of SAC Capital Advisors, responds to a question during a one-on-one interview session at the SkyBridge Alternatives (SALT) Conference in Las Vegas, Nevada May 11, 2011. REUTERS/Steve Marcus