At the height of his powers, Steven A. Cohen, the owner of the hedge fund giant SAC Capital Advisors, turned away investors. These days, he is fighting to keep them.
SAC has given its investors an extension to decide whether to withdraw money from the $15 billion fund, according to a person briefed on the matter. The deadline has been pushed back from May 16 to June 3, this person said.
While only a couple of weeks, the extension hints at the tense behind-the-scenes discussions between SAC and its investors over the firm’s central role in the government’s vast crackdown on insider trading. Nine current or former SAC employees have been implicated in the multi-year investigation.
Mr. Cohen last week sent a letter to its investors outlining a broad set of reforms to address concern over lax compliance at SAC. He also said that the fund would hold back compensation for employees that became ensnared in government inquiries. “We have zero tolerance for wrongdoing,†he said.
The letter appeared to be an effort to appease investors who have grown concerned over the firm’s exposure to the government inquiry.
Earlier this year, investors pulled $1.7 billion from the fund, or about 25 percent of SAC’s assets from outside investors. (The balance of the fund consists of mostly Mr. Cohen’s money.)
Jonathan Gasthalter, a spokesman for SAC, declined to comment on the reasons for extension.
One possible reason for granting the additional time is that SAC investors are awaiting the resolution of a civil action brought against SAC by the Securities and Exchange Commission. In that case, SAC agreed to pay $616 million to resolves charges related to illegal trading in the pharmaceutical stocks Elan and Wyeth. It neither admitted nor denied wrongdoing as part of the settlement.
The federal judge presiding over the case, Judge Victor Marrero, must sign off on the settlement. Last month, he approved the agreement, but conditioned it on a pending decision from a federal appeals court in a pending case involving Citigroup. Judge Marrero raised concerns with the “neither admit nor deny†language that the S.E.C. includes in many of its settlement, an issue that the appeals court is expected to weigh in on in the Citigroup case.
“We are hopeful that the next few months will bring great clarity surrounding the resolution of pending regulatory matters,†Tom Conheeney, the president of SAC, recently said in a statement.
Two former SAC employees currently under indictment for insider trading â€" Mathew Martoma and Michael S. Steinberg â€" are fighting the charges brought against them.
Last week, a judge said Mr. Steinberg’s trial would start on Nov. 18. Mr. Martoma, who was at the center of the drug stock trades cited in the charges, has yet to receive a trial date.
