Business

SAC to plead guilty to fraud

Steve Cohen may be ready to exhale.

An expected $1.2 billion deal between Cohen’s SAC Capital Advisors hedge fund and prosecutors to settle criminal insider-trading charges against the firm could insulate the billionaire investor from criminal charges, according to a report.

In the deal, expected to be announced within days, SAC will plead guilty to securities fraud and pay the massive fine. It will also agree to quit managing outside investor capital — becoming a family office solely to manage Cohen’s $9 billion fortune.

As part of the deal, a long-running criminal probe of Cohen will continue, but no charges are expected against him, the Wall Street Journal reported Tuesday, quoting people familiar with the deal.

White-collar criminal experts have long suspected that any SAC settlement would have to protect Cohen, the firm’s founder and owner, from similar criminal charges.

“I would be surprised if SAC pays $1 billion and still has exposure for Steve Cohen,” said David Kotz, a former inspector general of the Securities and Exchange Commission and director at the Berkeley Research Group, a consulting firm.

“Staying out of jail is all that really matters” to Cohen, said Kotz. “He’ll have money left over.”

Steve Cohen

SAC has denied the charges, brought by a grand jury empaneled by Manhattan US Attorney Preet Bharara. Cohen has not been charged with any criminal activity.

However, Bharara isn’t giving Cohen a total pass. He will remain under criminal investigation, sources told the Journal. But no charges will be filed unless there are “unexpected developments in the probe,” it reported.

Two upcoming insider-trading trials of former SAC managers could provide such developments. If either Michael Steinberg or Mathew Martoma decide to testify against their former boss, that new evidence could be used against Cohen, sources said.

“One of these guys could flip” either before the trial or even if they are convicted, said Solomon Wisenberg, a partner at Barnes & Thornburg.

Neither man has shown any willingness to cooperate with the prosecution so far.

A SAC spokesman declined to comment.