According to the US government, the Securities and Exchange Commission's administrative proceeding filed against SAC Capital Advisors LP founder Steven A. Cohen should be on hold until the prosecution of his former employees have been resolved. The recommendation was made to an agency judge, Brenda P. Murray, by Assistant US Attorney Arlo Devlin-Brown in a letter yesterday.
Bloomberg said that the SEC has filed its own case against the billionaire founder last year, claiming that he failed to supervise former hedge fund managers Mathew Martoma and Michael Steinberg, who have been convicted for insider trading at the firm. Steinberg has been handed out a three and a half month prison sentence this month in a New York federal trial, while Martoma is expected to receive his sentence in a hearing scheduled on June 10.
Cohen has yet to be charged with a crime following the insider trading scandal. His firm, on the other hand, had reached a settlement with the US government last year, agreeing to pay $1.8 billion and submitting guilty pleas to charges of making hundreds of millions of dollars in illicit profits and for fostering a criminal culture in his company. SAC Capital has since closed its doors to outside investors and have renamed the company to Point72 Asset Management LP to start afresh.
Bloomberg said Steinberg's case could be dragged in court much longer after a judge who presided the a related case that appealed the convictions of two other portfolio managers have expressed the possibility that the former hedge fund manager's conviction could be overruled. On the other hand, Martoma's defense team had since asked leniency from the judge who will be handing out his sentence, arguing that the former traders role was less culpable that the other defendants.
The probation department of the US government had recommended 15 to 20 years in prison for insider-trading charges, of which Martoma's lawyer, Richard Strassberg, had called it "outrageous."
