Two affiliates of SAC Capital, the giant hedge fund, settled insider trading charges with the Securities and Exchange Commission for $614 million, in what the agency said was the biggest ever settlement for such cases.
One affiliate, CR Intrinsic, agreed to pay over $600 million over charges tied to one of its employees, who is accused of trading on illicitly obtained confidential information about the drug makers Elan and Wyeth. That employee, Mathew Martoma, still faces both civil charges from the S.E.C. and criminal charges from the Justice Department.
The other affiliate, Sigma Capital Management, agreed t pay $14 million to settle charges that it engaged in insider trading in the stocks of Dell and Nvidia.
SAC’s management company will pay the settlements, meaning that investors of the hedge fund aren’t on the hook.
The settlements, especially that of CR Intrinsic, represent more successes by the federal government in its campaign against insider trading.
“The historic monetary sanctions against CR Intrinsic and its affiliates are sharp warning that the S.E.C. will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm,†George S. Canellos, the acting director of the S.E.C.’s enforcement division, said in a statement.
A spokesman for SAC noted in a statement that Steven A. Cohen, the founder of the hedge fund, has not been charged with any wrongdoing.
The ! spokesman added, ““We are happy to put the Elan and Dell matters with the S.E.C. behind us. This settlement is a substantial step toward resolving all outstanding regulatory matters and allows the firm to move forward with confidence. We are committed to continuing to maintain a first-rate compliance effort woven into the fabric of the firm.â€
