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January 08, 2016 at 08:15 AM
SAC Capital Advisors founder Steven A. Cohen agreed Friday to be prohibited from supervising funds that manage outside money until 2018, settling Securities and Exchange Commission charges that he failed to supervise a former portfolio manager who engaged in insider trading while employed at his firm.
In addition, Cohen’s family office firms will be subject to SEC examinations and the firms must retain an independent consultant to conduct periodic reviews of their activities to ensure compliance with securities laws, the securities regulator said Friday.
“Before Cohen can handle outside money again, an independent consultant will ensure there are legally sufficient policies, procedures and supervision mechanisms in place to detect and deter any insider trading,” said Andrew Ceresney, director of the SEC’s Enforcement Division. “The strong combination of a two-year supervisory bar and additional oversight requirements achieves significant and immediate investor protection and deterrence, while ensuring that the activities of his funds are closely monitored going forward.”
The SEC’s order finds that Cohen failed to supervise former portfolio manager Mathew Martoma, who engaged in insider trading in 2008 while employed at CR Intrinsic Investors, an investment advisory firm that was a wholly-owned subsidiary of SAC Capital Advisors LLC, an entity founded and controlled by Cohen.
In 2014, SAC Capital returned all of its outside investor capital and was renamend Point72 Asset Management. It is now a family office managing the assets of Cohen and eligible employees.
Cohen neither admitted nor denied the SEC’s finding that he failed reasonably to supervise Martoma and prevent his violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
