When hedge-fund billionaire Steve Cohen talks, Uncle Sam listens.
Federal prosecutors have proposed settling the government’s criminal case against Cohen’s SAC Capital Advisors — but are insisting the $10 billion-plus fund admit to insider trading, according to a report.
The proposed settlement of the most-watched lawsuit on Wall Street would come with a fine of up to $2 billion, the report said.
The proposal from US Attorney Preet Bharara comes on the heels of a request from SAC’s lawyers suggesting just such an end to the high-wattage legal fight.
SAC’s lawyers, according to the report at wsj.com, first proposed a much lower amount — and suggested the $616 million the Stamford, Conn., fund paid to settle a regulatory suit in March be counted toward the criminal fine.
The SAC legal team’s first offer was closer to $1 billion, according to a report Monday by Bloomberg.
SAC’s lawyers are expected to counter the government’s comeback proposal in the coming weeks, the Wall Street Journal’s web site reported.
A federal grand jury in July charged the 21-year-old fund with insider-trading and said cheating by traders there was “substantial, pervasive and on a scale without precedent in the hedge fund industry.”
Cohen was not charged criminally, and SAC has maintained the firm was operated properly.
Eight current or former employees of SAC have been charged with insider trading.
Six of the eight have already pleaded guilty.
In addition, the Securities and Exchange Commission sued Cohen personally, alleging he failed to supervise the two employees who are still facing trial for insider trading: Mathew Martoma and Michael Steinberg.
The SEC’s case seeks to ban Cohen from managing other people’s money.
If Cohen succeeds in hashing out a deal, even if he’s barred from the industry, he would still walk away with billions of dollars and be able to run a family office.
SAC is facing roughly $6 billion in withdrawals by outside investors, which will leave the firm with roughly $9 billion by the end of the year — the bulk of which is Cohen’s personal fortune. His employees have about $1 billion invested in the firm.