SAC Capital Advisors is seeking to calm investor concern about founder Steven A. Cohen’s trading in two drug stocks and possible regulatory sanctions after prosecutors for the first time tied Cohen to a specific transaction at the center of an insider-trading investigation.
Bloomberg reports that executives at the $14bn firm have spoken to some of their largest clients after a former portfolio manager was arrested November 20th, the sixth time a current or former employee was linked to insider trading while working at the firm.
The Stamford, Connecticut-based firm is telling investors that compliance procedures are robust and the hedge fund is cooperating with the government, said two clients, who asked not to be named because the fund is private.
'Patience will be wearing thin among some investors after this latest accusation', said Vidak Radonjic, managing partner at Beryl Consulting Group LLC in Jersey City, New Jersey, which advises clients on investing in hedge funds. 'There is a pattern of potential compliance breaches and the money involved is getting bigger'.
Prosecutors say SAC, one of the best-performing hedge funds, reaped $276m in profits and averted losses after Mathew Martoma, a former portfolio manager at a unit of SAC, used inside information from a clinical trial to trade in shares of two health-care companies in 2008. The investors said they are much more concerned about last week’s charges than previous ones because Cohen, according to a criminal complaint, traded those shares in his own portfolio and discussed them with Martoma.
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