Preet Bharara doesn't seem to be done with Steve Cohen. In a press conference announcing a massive insider trading settlement with SAC Capital, the U.S. Attorney for the Southern District reiterated no individual is off the hook, and that their investigation remains ongoing. Steve Cohen has been accused by the SEC of failing to supervise two portfolio managers, Mathew Martoma and Michael Steinberg, who are being taken to trial by the government for insider trading. Beyond the SEC charges, Cohen will have to pay attention to the trials of his former employees, as their outcomes, or either of them choosing to cooperate with Bharara's office, could give the government a stronger case against the embattled billionaire. With 75 convictions for insider trading under his belt, Bharara is probably pretty optimistic.
Preet Bharara, United States Attorney for the Southern District of New York , when he unveiled the indictment of SAC Capital - Image credit: AFP/Getty Images via @daylife
"Greed, sometimes, is not good," Preet Bharara told a room full of reporters on Monday, as he proudly announced a $1.8 billion settlement with SAC Capital which includes the firm ceasing to manage outside money. Despite scoring a high profile victory, which comes with the end of closing of one of the largest hedge funds out there, Bharara indicated his office is not done with its insider trading case against Steve Cohen's firm.
The settlement documents point it out clearly, noting "this agreement does not provide any protection against prosecution or other enforcement action against the SAC Entity Defendants, any owner, shareholder, or employee of the SAC Entity Defendants or any other person." In a letter to the judges Bharara goes further, saying "the agreement provides no immunity from prosecution for any individual and does not restrict the Government from charging any individual for any criminal offense and seeking the maximum term of imprisonment applicable to any such violation of criminal law."
Asked repeatedly about Cohen during the press conference, Bharara stressed that the investigation is far from over. He even noted they still had wiretaps of other individuals who haven't been charged yet. And while Cohen himself will be paying the totality of the fine from his own pocket, as he did with the previous $616 million settlement with the SEC, some could say he managed to get away. Cohen remains a multi-billionaire and hasn't been charged with any criminal wrongdoing. He will probably earn enough this year to cover the whole fine, as my colleague Nathan Vardi explained, and will still be able to manage his own fortune. Whether he'll still be able to deliver returns without the massive infrastructure is another question.
It is important to note that SAC Capital admitted to having broken the law. "We take responsibility for the handful of men who pleaded guilty and whose conduct gave rise to SAC's liability. The tiny fraction of wrongdoers does not represent the 3,000 honest men and women who have worked at the firm during the past 21 years. SAC has never encouraged, promoted or tolerated insider trading," read a statement released by Cohen's hedge fund. SAC Capital, which is wholly owned and managed by Steve Cohen, agreed to plead guilty to insider trading charges, meaning its employees were engaging in criminal activity and while that doesn't directly tie in Cohen, in conjunction with the SEC's failure to supervise charges, it builds a stronger body of proof against the hedge fund manager.
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It's not clear whether Preet Bharara will succeed in getting Steve Cohen prosecuted for insider trading. If he had a case, he would have already brought it to court. What is evident, though, is that the prosecution will not rest until it has exhausted every option.
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