When Bain Capital bought Gymboree, the children’s apparel chain, for $1.8 billion in 2010, it was seen as a useful addition for the private-equity powerhouse.
Three years later, trades of Gymboree shares could also be useful for US Attorney Preet Bharara.
Investigators for the dogged Manhattan crime-fighter are said to be poring over trades in Gymboree as part of a criminal probe of SAC Capital Advisors owner Steve Cohen.
Even after winning guilty pleas and recordetting penalties from SAC on Monday, Bharara appears to still have his eyes on one prize: Cohen.
“There is no immunity for criminal prosecution for any person,” Bharara said Monday in announcing the settlement.
Stern and determined as he faced the media, Bharara reminded the group: “We are not shy and retiring people. We are not unaggressive. The investigation is ongoing.”
SAC is the first Wall Street firm since Drexel Burnham Lambert in 1989 to plead guilty to insider trading.
The main culprit in the Drexel case, Mike Milken, eventually went to jail for 10 years,
Steve CohenCohen has not been charged with any crimes. The Securities and Exchange Commission has filed suit against Cohen for failing to properly supervise traders at his firm — and the 57-year-old mogul has steadfastly denied those allegations.
While the probe of Cohen has yet to result in any evidence of crimes by SAC’s founder, two upcoming trials of SAC traders will not treat the firm kindly.
In addition, six former SAC employees have already either pleaded guilty or were convicted in the ongoing insider-trading probe.
Cohen and SAC are likely to see their reputations sullied with the Nov. 18 trial of former SAC portfolio manager Michael Steinberg, who is charged with insider trading in Dell.
Former SAC analyst Jon Horvath, who pleaded guilty in the same matter, is expected to testify against Steinberg.
In January, former SAC portfolio manager Mathew Martoma goes on trial for insider trading in the shares of Elan and Wyeth.
Prosecutors have called those the most profitable insider trades ever, netting SAC $276 million.
But even though Martoma spent 20 minutes speaking on the phone with Cohen the day before the trades were made, the portfolio manager has not yet agreed to cooperate with prosecutors.
Many white-collar crime experts remain skeptical that either man will end up offering enough evidence to put Cohen behind bars.
“The likelihood is they have no evidence that would be helpful to the government,” said Jacob Frenkel, a former federal prosecutor and SEC enforcement lawyer. “If the government were more confident it had a case against Cohen, we would not have seen this settlement.”
Barring any new developments from those trials, what happens next is up to the SEC, which will decide whether to revoke Cohen’s securities license following the conclusion of the Martoma trial.
As part of SAC’s plea to five counts of securities fraud, SAC agreed to give back all investor money and shut down its current funds.