Criminal Charges Filed Against SAC Capital Adisors

As has been widely reported, Criminal charges were filed against SAC Capital Advisors LP, with accusations that the hedge-fund firm is guilty of a decade long “scheme” of insider trading. In total, prosecutors charged SAC Capital and its business units with a total of four counts of securities fraud and one count of wire fraud. The charges come after a multiyear investigation by the FBI, prosecutors, and the SEC. The government is also accusing former SAC portfolio manager, Richard Lee, of conspiracy to commit securities fraud. The indictment comes only a short time after SAC agreed to a $616 million settlement of insider-trading charges.

Civilly, prosecutors are looking to have SAC and any of its affiliated corporate entities surrender all of their assets. SAC manages some $14 billion in assets, a majority of which does not come from outside investors.

In a separate civil action, the SEC is seeking a lifetime ban for Steven A. Cohen, who started SAC twenty-one years ago with roughly $20 million of personal funds, from managing client money. Mr. Cohen has not been charged criminally but denies any allegation of wrongdoing. Before the financial crisis of 2008, SAC held over $16 billion in assets and reportedly charged some of the highest fees in the business – 3% annually on the total investment, plus as much as 50% of whatever profits the firm generates.

This is just the latest example of the tarnishing of some of the largest and most prestigious names on Wall Street. The revelations of the past five years should serve as an indication to investors that even the most well-known financial firms and well-respected individuals at those firms are not always “doing things by the book” and can still be negligent or even perpetrate a knowing fraud. Investors should also be aware that if they find themselves the victims of a negligent financial advisor or a larger scale fraud, they may have a right to recover some or all of their losses.

If you believe that you or a family member may be the victim of a financial advisor’s negligence or fraud, it is your right to consult with an attorney and explore your options. For a free consultation, contact the investment fraud attorneys at Malecki Law at (212)943-1233. Malecki Law has recovered millions of dollars for victims of financial negligence and fraud.

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