NEW YORK (Reuters) - U.S. securities regulators on Monday said they would move forward with a revised civil case against hedge fund billionaire Steven A. Cohen after prosecutors dropped criminal insider trading charges against a former SAC Capital Advisors employee.
The U.S. Securities and Exchange Commission said in a filing it plans to pursue a claim that Cohen failed to supervise former SAC Capital portfolio manager Mathew Martoma, who is serving a nine-year sentence for insider trading.
But the SEC said it plans to amend its case against Cohen as it no longer plans to base its claim against the billionaire for failing to supervise another portfolio manager, Michael Steinberg.
Steinberg had been sentenced to 3-1/2 years in prison after being convicted at trial in 2013 for engaging in insider trading while at Cohen’s hedge fund, SAC Capital.
But in October, federal prosecutors dismissed charges against Steinberg after the U.S. Supreme Court declined to review a court ruling that made pursuing insider trading cases tougher.
While the SEC no longer plans to pursue its claim related to Cohen’s supervision of Steinberg, the agency said at trial it intends to introduce evidence related to Steinberg to prove Cohen’s liability in connection with Martoma.
A spokesman for Cohen declined comment. But in the filing, his lawyers said he reserved the right to move to exclude or limit evidence not relevant to his supervision of Martoma.
Cohen was never criminally charged in the insider trading investigation of SAC Capital. But the SEC filed an administrative action against him in July 2013, seeking to ban him from the securities industry.
SAC Capital agreed in 2013 to plead guilty and pay $1.8 billion over insider trading by several of its employees. It has since rebranded itself Point72 Asset Management.
The SEC’s case against Cohen had been on hold as prosecutors pursued the related cases including Steinberg’s. The stay was lifted earlier this month.
Trial in Cohen’s case is scheduled for April.
Reporting by Nate Raymond in New York; Editing by Alan Crosby