NEW YORK - SAC Capital Advisors, hedge fund of billionaire Steven A. Cohen, Friday pleaded guilty to fraud charges as part of a $1.2 billion deal with the government to resolve a long-running insider trading investigation, but the judge hearing the case reserved her decision on whether to accept the plea until after a pre-sentencing report was filed.
The guilty plea to securities fraud and wire fraud was submitted in the U.S. District Court in Manhattan by SAC General Counsel Peter Nussbaum four days after the government announced that the once influential hedge fund had reached the deal that also required it to pay a record $1.8 billion and to shut down its operations to outside investors.
Both the criminal prosecution and a federal money- laundering suit has been brought by Manhattan U.S. Attorney Preet Bharara, who has held the fund responsible for insider trading by at least eight current or former portfolio managers and analysts who worked there.
The company, indicted in July, was "a veritable magnet for market cheaters" in an insider-trading scheme that dated back to 1999, Bharara said.
Judge Laura Taylor Swain did not immediately accept the guilty plea, saying she'd wait until a probation report is made, setting a sentencing date for March 14.
As part of the plea, Nussbaum listed former employees who had been convicted of insider trading charges and described their offenses.
"On behalf of SAC, I want to express our deep remorse for the misconduct of each individual who broke the law while employed at SAC," he said.
"This happened on our watch, and we are responsible for that misconduct."
Cohen, 57, who founded SAC in 1992, wasn't charged in the indictment of the Stamford, Connecticut-based firm. He still faces a pending administrative action filed by the U.S. Securities and Exchange Commission for his alleged failure to supervise the hedge fund's activities.
Ethan Wohl, a lawyer for investors in a lawsuit related to another pending SAC insider trading case, urged Swain not to accept the plea, stating that it "would let the defendants plead out without acknowledging they did what was alleged in the indictment."
He also urged the judge not to allow SAC to "cherry-pick the offense that will have the least collateral damages."
Under the plea agreement SAC reached with prosecutors, the hedge fund has agreed to pay $900 million in penalties to resolve the criminal case unveiled against it in July.
A federal judge on Wednesday signed-off on another $900 million judgment in the companion civil forfeiture action filed at the same time against SAC.
Under the civil deal, the hedge fund will only have to pay $284 million, after getting credit for $616 million in settlements in related insider trading cases by the U.S. Securities and Exchange Commission.
SAC has reserved its right to withdraw its plea if Swain does not impose the penalties negotiated with prosecutors.
In a related case, a former California technology analyst pleaded guilty Friday to insider trading charges in a co-operation deal with the government, admitting that he told secrets to an SAC Capital portfolio manager and others in 2009 about a blockbuster deal between Microsoft and Yahoo.
Sandeep Aggarwal, 40, entered the plea to conspiracy and securities fraud charges, telling U.S. Magistrate Judge Ronald L. Ellis that he passed along information gathered from a former colleague at Microsoft Corp. about the company plans to create a search engine advertising partnership with Yahoo Inc.
The plea settled charges brought against Aggarwal when he was arrested in July in San Jose, California.
His co-operation deal with the government could considerably reduce his sentence for charges that otherwise would carry a potential prison sentence of up to 25 years. A tentative sentencing date was set for May 14.
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Original headline: SAC Capital pleads guilty in insider trading case
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