U.S. alleges five counts of fraud against SAC Capital
U.S. Attorney Preet Bharara, the top federal prosecutor in Manhattan, announced the grand jury's indictment of SAC on Thursday. The indictment, which names SAC Capital and related entities, alleges one count of wire fraud and four counts of securities fraud.
The indictment alleges "systematic insider trading" from 1999 through 2010, "resulting in hundreds of millions of dollars of illegal profits and avoided losses at the expense of members of the investing public."
A spokesman for the firm did not immediately respond to a request for comment.
The case against SAC is the culmination of a years-long government probe into allegations that the firm's employees sought to obtain and then trade stocks based on confidential information unavailable to the broader investing public.
Steven A. Cohen, who founded SAC, has been circled by federal prosecutors for years, but was not charged personally Thursday.
In addition to the case against SAC, prosecutors also announced insider-trading charges against portfolio manager Richard Lee, who pleaded guilty this week.
Observers have seen recent criminal cases against two other top managers as an attempt by prosecutors to snag Cohen himself.
The Securities and Exchange Commission last week filed an administrative action against Cohen seeking to bar him from managing other investors' money. The action accused Cohen of failing to supervise his employees who allegedly engaged in insider-trading, but did not accuse him of participating in any schemes. A spokesman for Cohen has maintained the fund manager has always acted appropriately.
Apart from Thursday's indictment, the government's case against SAC has had its own milestones.
In November, federal prosecutors accused former SAC portfolio manager Mathew Martoma with conducting the most lucrative trading scheme of all time. His allegedly illicit trades in two drug company stocks netted $276 million in illegal profits and avoided losses. Prosecutors said Martoma had leaked confidential information concerning problems with the companies' experimental Alzheimer drug.
Then in March, SAC agreed to a record $616 million settlement with the SEC. The firm agreed to pay the largest-ever insider-trading penalties to end probes into Martoma's trades, as well as and other allegedly suspicious trades in Dell stock. SAC settled the cases without admitting or denying wrongdoing.