9:00 p.m. | Updated The government’s insider trading investigation of the giant hedge fund SAC Capital Advisors entered a more contentious phase this week, with criminal authorities issuing a new round of subpoenas requesting information about the firm’s activities, according to lawyers briefed on the case.
The requests, which numbered more than a dozen, indicate that federal prosecutors and the F.B.I. are intensifying their efforts to build a case against the firm and its executives, including its billionaire founder, Steven A. Cohen, 56.
The government’s newly aggressive posture led to an unusual response from the hedge fund. On Friday, SAC told its investors in a letter that it was no longer fully cooperating with the investigation.
“While we have in the past told you of our cooperation with the government’s investigation, our cooperation is no longer unconditional,†the letter said.
Neither the firm nor Mr. Cohen has been charged with wrongdoing. The hedge fund owner has maintained that he has behaved appropriately at all times.
Still, over the last five years, SAC has been in the cross hairs of the government’s crackdown on illegal trading on Wall Street.
Nine former or current SAC employees have been tied to insider trading while at the fund; four of them have pleaded guilty. Earlier this year, SAC agreed to pay $616 million to settle two civil cases brought against it by the Securities and Exchange Commission, a move seen inside the firm as a major step toward resolving its role in the investigation.
But in recent days, the government signaled that its inquiry into the fund was far from over, if not escalating. The subpoenas asked for numerous trading records related to the buying and selling of specific stocks, as well as other documents, according to the lawyers.
The latest requests were frustrating for Mr. Cohen and his legal team, which led to the decision to take a tougher stand, lawyers briefed on the case said. SAC objected to certain aspects of the subpoenas.
As a result of the new requests, the fund decided that it could no longer provide its investors with updates on the inquiry.
A spokesman for SAC, Jonathan Gasthalter, declined to comment.
“In the past we have tried to be as transparent with you as possible about the state of the investigation, while balancing our desire for transparency with the need to keep the details of a sensitive investigation confidential,†SAC said in the letter sent on Friday to investors.
“During this period, however, the need for confidentiality will limit our ability to share with you details about how the investigation is progressing,†the letter said.
While SAC’s letter highlighted the more aggressive position taken toward the government, the fund also sought to allay its investors’ concerns about the state of the investigation. The firm said it expected that there would be “substantially more clarity†as to the outcome of the investigation in the coming months. It also said that its changed posture toward the inquiry would “not have a financial impact to our funds.â€
SAC, which is based in Stamford, Conn., is fighting to keep its clients from withdrawing money from the $15 billion fund. It recently gave its investors an extension to decide whether to withdraw money, pushing back the deadline to June 3 from May 16. Earlier in the year, investors withdrew $1.7 billion from the fund, an amount that equals about 25 percent of the hedge fund’s outside money. (The balance of the fund, which is about $9 billion, consists mostly of Mr. Cohen’s fortune.)
The subpoenas and SAC’s response come as the fund awaits final resolution of the larger of the two civil settlements it struck with the S.E.C. earlier this year. In that case, SAC agreed to pay $602 million to resolve charges related to illegal trading in the pharmaceutical stock Elan and Wyeth. It neither admitted nor denied wrongdoing as part of the settlement.
The settlement requires the approval of the federal judge presiding over the case, Victor Marrero. Last month, he approved the agreement, but conditioned it on a pending decision from a federal appeals court in a case involving Citigroup. Judge Marrero raised concerns with the “neither admit nor deny†language that the regulatory agency includes in many of its settlements, an issue that the appeals court was expected to address in the Citigroup case.
Another concern for the hedge fund involves the two former SAC employees under indictment for insider trading: Mathew Martoma and Michael S. Steinberg. They are fighting the charges, but if either decided to plead guilty and cooperate, they could potentially help the government build its case.
Earlier this month, a judge set Mr. Steinberg’s trial for Nov. 18. Mr. Martoma, who was at the center of the Elan and Wyeth trades, has yet to receive a trial date.
Mr. Cohen directly participated in the questionable Elan and Wyeth trades, which were made in July 2008. Under the five-year statute of limitations for insider trading crimes, the authorities would have to file either criminal charges or a civil case against the hedge fund billionaire related to those trades by mid-July. The government has not said that Mr. Cohen knew any confidential information when he made those trades.
Despite the multitude of distractions, the SAC founder rubbed elbows with celebrities and socialites on Monday night at the Robin Hood Foundation’s annual gala in Manhattan. The benefit, which featured performances by Bono, Sting and Elton John, raised $72 million to fight poverty.
A version of this article appeared in print on 05/18/2013, on page A1 of the National edition with the headline: Hedge Fund Starts to Balk Over Inquiry .