A US hedge fund has paid a record $600m (£397m) fine to settle claims that it traded on insider information about a dud Alzheimer's drug.
US regulator the Securities and Exchange Commission said SAC Capital, a hedge fund run by billionaire Steve Cohen, had agreed to pay the biggest insider dealing fine in history to settle the case.
The hedge fund had been accused of profiting from "the most lucrative insider trading scheme ever" by selling shares in the companies developing the drug before the negative clinical trial results were officially released.
SR Intrinsic, a division of SAC Capital, sold $960m of securities in pharmaceutical companies Elan Corporation and Wyeth after a doctor tipped off the hedge fund that the drug, Bapineuzumab, would have negative results. The hedge fund allegedly made a $276m profit from the deal.
Mathew Martoma, who was the manager of SR Intrinsic at the time, received a $9.3m bonus after the deal. Martoma still faces both criminal and civil charges in relation to the case. His lawyer said: "SAC's business decision to settle with the SEC in no way changes the fact that Mathew Martoma is an innocent man. We will never give up our fight for his vindication."
George Canellos, acting director of the SEC's enforcement division, said: "The historic monetary sanctions against CR Intrinsic and its affiliates are sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm."
SAC said it was happy to put the matter behind it. "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." The hedge fund did not admit any wrongdoing.
Cohen, who has long been the focus of a federal investigation into insider trading, was not personally implicated in this case.
In addition to the Alzheimer's drug insider trading settlement, SAC also agreed to pay $14m to settle allegations that the $14bn hedge fund traded in advance of Dell's earning results.
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