Not so fast, Steve.
The $1.8 billion settlement between Steve Cohen’s SAC Capital Advisors and the Justice Department is drawing fire from burned investors and other critics who say the hedge-fund giant and its founder are getting off easy.
A Manhattan federal judge approved the civil slice of the settlement on Wednesday, but another judge who oversees the criminal piece is being urged to reject the deal. US District Judge Laura Taylor Swain is holding a hearing on Friday before she decides whether to give it a thumbs up or a thumbs down.
SAC agreed to plead guilty to five counts of securities and wire fraud and pay $1.8 billion to close the books on Manhattan US Attorney Preet Bharara’s long-running probe of insider trading at the hedge fund.
But shareholders in the companies where the insider trading is alleged to have occurred are urging Swain to reject the deal, along with at least one citizen enraged enough to email the judges about what he believes is a “gross miscarriage of justice.”
“We urge the court to reject the plea deal, order DOJ to go trial, lock [Cohen] up and freeze all his assets like poorer defendants,” wrote a person identified as “Eddy N.” in a five-page email.
Although his hedge fund is pleading guilty in the criminal case, Cohen has not been personally charged.
Shareholders of Elan and Wyeth also are asking the court to turn down the deal, saying SAC did not admit any of its employees engaged in insider trading specifically tied to those companies.
“It allows SAC to plead guilty without admitting that it is guilty of the principal criminal conduct charged in the indictment — insider trading in the securities of Elan Corp. and Wyeth,” they complained in a court filing Thursday.
Illicit trading in those two drug stocks is alleged to have earned SAC $276 million, the biggest insider trade in history — and more than 80 percent of the money the feds have singled out as SAC’s illegal profits.
Even with the record fine, the email writer, Eddy N., noted that Cohen still will have $7.2 billion of his $9 billion left. Cohen is expected to earn at least $1.8 billion this year, much of it from fees running his hedge fund.
“Steve Cohen is laughing all the way to the bank because this is just one year’s pay for him,” Eddy N. wrote.