Cohen's SAC taps analytics firm Palantir to monitor employees

Wed Mar 19, 2014 6:33pm EDT
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By Svea Herbst-Bayliss

BOSTON (Reuters) - Billionaire investor Steven A. Cohen hired a top Silicon Valley data analytics firm to keep closer tabs on his employees just months after his hedge fund SAC Capital Advisors pleaded guilty to insider trading charges.

Palantir Technologies, a "big data" information intelligence firm that has worked for the Federal Bureau of Investigation and the Central Intelligence Agency, will help strengthen the firm's compliance and surveillance teams, SAC President Tom Conheeney wrote to employees on Wednesday.

"We have asked ourselves if there are ways to better detect improper activity and to create a clearer picture of the different types and sources of information that enter the firm," he said in the memo, which was seen by Reuters.

SAC agreed to pay a $1.2 billion penalty and return all money to outside investors as part of a plea to settle criminal insider trading charges. Cohen was not accused of any wrongdoing but the U.S. government brought criminal and civil cases against 10 former SAC employees and said that insider trading was "pervasive" and "rampant" at the hedge fund.

As SAC tries to move forward, with less capital and a tattered reputation, the firm has announced new oversight initiatives plus a name change all with the intention of continuing to invest.

"We have been looking for a technological solution that will help us make sense of the disparate pieces of information we already have, to help us 'connect the dots'," he wrote.

Palantir is coming on board only a few months after SAC Capital Advisors, once one of the world's biggest and most successful hedge funds with $14 billion in assets at the start of 2013, plead guilty to insider trading.

The U.S. government had been investigating the firm for about a decade and unveiled its most recent case last week when the Securities and Exchange Commission brought a civil suit against Ronald Dennis. Dennis agreed to pay $200,000 and be banned from the securities industry to settle the charges.   Continued...

An exterior view of the headquarters of SAC Capital Advisors, L.P. in Stamford, Connecticut July 25, 2013. REUTERS/Michelle McLoughlin