SAC Capital Advisors, a $14 billion hedge fund, is at the center of an ongoing Federal probe into insider trading. This has prompted at least one known, though anonymous, investor to request redemption of its shares. Commented the investor:
"We don't want to be fickle. We hate doing this. But the government seems so intent now in getting them and there are additional SAC-related characters tainted. Some dealt with the same stocks at SAC."
The Justice Department is cracking down on insider trading, but neither SAC nor any of its current employees stand accused of wrongdoing. But reports persist of an ongoing investigation centering on founder Steven Cohen's own trading account. Instant messages between SAC employees and Primary Global Research, the expert network under investigation, are part of the evidence in that case.
Congress is also investigating SAC.
SAC former employees are entangled in the Galleon Group and Primary Global Research insider-trading cases. They include Noah Freeman and Donald Longueuil, both former SAC portfolio managers; they both have pleaded guilty in the Primary Global case. Also, there is Joseph Skowron, a former healthcare fund manager for FrontPoint Partners and SAC alumnus. Skowron was charged in April with insider trading.
It remains to be seen whether these investigations will scare away other investors and prompt further redemptions. One investor commented:
UPDATE - JUNE 2, 2011"We will sit tight until there is a real reason to do anything. It is all noise."
The New York Times reports that the SEC is conducting two separate insider-trading investigations of SAC Capital Advisors. One concerns SAC's dealings with Medimmune Inc during its acquisition by AstraZeneca. The other investigation is probing the hedge fund's relationships with expert networks.
© 2011 Hedge Fund Writer LLC
