Criminal Charges Including Securities and Wire Fraud Leveled Against SAC
After seven years of investigation, the largest ever insider-trading case moved forward on Thursday, July 25th: a federal grand jury indicted SAC Capital Advisors, run by billionaire Steven A. Cohen, on charges of securities and wire fraud.
The hedge fund was charged with four counts of securities fraud, and one count of wire fraud. The federal government is seeking to force SAC to surrender any fraud-related profits. The charges have been filed specifically against the company, not founder Steven A. Cohen.
However, the federal government has filed a civil suit against Cohen, claiming that he did not adequately supervise the people at his firm.
SAC Capital Advisors is currently one of the most successful hedge funds in the industry. The company generated more than $300 million last year in trading fees alone for Wall Street investors. Economists are worried that the federal securities and wire fraud charges could topple the business and hurt the economy.
The indictment states that between 1999 and 2010, SAC obtained insider information and used that information to make trades that boosted returns and fees, and dozens of employees knew about and were in on the scheme.
The federal criminal charges say that SAC’s “relentless pursuit of an information ‘edge’ fostered a business culture within SAC in which there was no meaningful commitment to ensure that such ‘edge’ came from legitimate research and not inside information … The predictable and foreseeable result, as charged herein, was systematic insider trading by the SAC entity defendants resulting in hundreds of millions of dollars of illegal profits and avoided losses at the expense of members of the investing public.” It further alleges that employees were financially incentivized to refer Cohen to “high conviction” trading ideas in which traders had an “edge” over other investors.
The indictment also stated that the hedge fund sought to hire portfolio managers and research analysts with proven access to public company contacts who were likely to possess insider information. When the employees made trading recommendations that appeared to be based on insider information, the indictment alleges, managers at SAC did not question the source of information.
While the most recent federal indictment is against the company as a whole, currently, nine former and current SAC employees have either been implicated in, or charged with, wrongdoing while at the firm, in separate cases.
Authorities do not plan to charge Cohen with any criminal wrongdoing, including federal charges of wire fraud or securities fraud, at this time.
Federal Wire Fraud Charges and Defense
Our federal criminal defense lawyers handle wire fraud cases involving:
- Fraudulent insurance claims
- Bond issuances and investment schemes
- Falsifying loan applications
- Check fraud schemes
- Bribes or kickbacks
- False advertising or misrepresentation in sales transactions
Transferring money to an offshore or international bank may be legitimate and legal transactions; however, tranferring money to an offshore or international bank account to hide a crime can lead to serious federal criminal charges.
The Strom Law Firm Defends Wire Fraud and Other Federal Charges
The Strom Law Firm, LLC has the experience that you need to defend your wire fraud charge. Founded by former U.S. Attorney and assistant solicitor, Pete Strom, our experienced criminal defense attorneys include a former public defender, and a former Assistant Attorney General and Richland County Assistant Solicitor, as well as a tax lawyer familiar with IRS investigations. Our experience and familiarity with prosecutorial techniques provide the basis for experienced and effective legal representation. We will fight hard to have your charges reduced, or even dismissed. Contact us today for a free consultation to discuss the facts of your case as well the most effective way to proceed with your case. 803.252.4800
