Stephen A. Cohen and SAC Capital will pay a group of Elan Corp. investors $135M to settle their insider trading case against him and the firm. The plaintiffs had contended that sustained they financial losses because of insider trading that involved Elan shares. A judge still has to approve the settlement.
Ex-SAC Capital money manager Mathew Martoma was convicted two years ago for making $285M for SAC Capital on trades involving Elan and Wyeth, both pharmaceutical companies. He used insider information about the clinical trials of an Alzheimer’s drug that companies were developing together. Martoma is appealing his conviction while serving a 9-year prison sentence.
Although Cohen was not charged with insider trading, his firm pleaded guilty and consented to pay $1.8B in criminal and civil penalties. SAC Capital also changed its name to Point72 Asset Management LP. Cohen, meantime, went from managing other people’s money to only being allowed to oversee his multibillion-dollar fortune.
He will once again be allowed to manage other people’s money in 2018.
By settling—the insider trading case was supposed to go to trial next month—Cohen avoids having to testify about his work relationship with Martoma. He and the former money manager reportedly talked on the phone for 20 minutes before his firm began selling off a $700M position in Wyeth and Elan. Cohen, however, told the SEC during testimony that he sold his firm’s shares in Elan after Martoma expressed concerns about the position. Earlier this year, the SEC found that that Cohen did not properly supervise Martoma.
It was nearly a year ago that SAC Capital consented to pay $10M to resolve the insider trading lawsuit brought by Wyeth shareholders. In that case, it was the Birmingham Retirement and Relief System, a pension fund for employees of the Alabama city, that sued because they owned Wyeth shares.
The SSEK Partners Group is a securities fraud law firm. We work with high net worth individual investors and institutional clients. Contact one of our experienced securities lawyers today to request your free case consultation.
Cohen’s SAC Capital in $135M Settlement with Elan Investors, Reuters, November 30, 2016
Hedge Fund SAC Capital to Pay $10M to Settle Insider Trading Suit, NBC News, December 24, 2015
The SEC Order Barring Cohen From Supervisory Hedge Fund Role, SEC, January 8, 2016