Two affiliates of S.A.C. Capital Advisors on Friday agreed to pay an aggregate $616 million to settle SEC insider trading charges.
In the largest-ever settlement of insider trading charges, hedge fund manager CR Intrinsic Partners agreed to pay $602 million to settle charges that the firm participated in an insider trading scheme regarding non-public information about Elan Corp. and Wyeth's jointly developed Alzheimer's drug.
In an amended complaint filed Friday in U.S. District Court in Manhattan, the SEC added S.A.C. Capital Advisors and four hedge funds managed by CR Intrinsic and S.A.C. as relief defendants because the firm and the funds benefited from the insider tips, according to an SEC news release.
In a separate settlement, hedge fund manager Sigma Capital Management agreed to pay about $14 million to settle insider trading charges involving non-public information about Dell Corp. and Nvidia Corp. quarterly earnings.
The complaint and settlement filed in the same court also named two hedge funds managed by Sigma and S.A.C. Capital as relief defendants that benefited from Sigma Capital's violations.
None of the parties to the settlements admitted or denied the charges. Both settlements must be approved by a federal judge.
Friday's actions “are (a) sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm,” said George S. Canellos, acting director of the SEC's division of enforcement, during a press call.
“We are happy to put the Elan and Dell matters with the SEC behind us.” said Jonathan Gasthalter, an S.A.C. Capital spokesman, in an e-mail. “This settlement is a substantial step toward resolving all outstanding regulatory matters.”