The dark side of Wall Street has once again been made public. One of the most substantial episodes of insider trading has taken one massive leap towards a resolution yesterday, when a federal grand jury indicted Steven A. Cohen’s hedge fund SAC Capital Advisors on fraud charges.
The hedge fund was charged with wire fraud in addition to four counts of securities fraud. The government is also pursuing SAC to surrender any fraud-related profits. The charges could undermine one of Wall Street’s top stock trading firms, yet would leave founder Steven A. Cohen unscathed.
According to the criminal charges, SAC’s “relentless pursuit of an information ‘edge’ fostered a business culture within SAC in which there was no meaningful commitment to ensure that such ‘edge’ came from legitimate research and not inside information.”
It went on to say, “The predictable and foreseeable result, as charged herein, was systematic insider trading by the SAC entity defendants resulting in hundreds of millions of dollars of illegal profits and avoided losses at the expense of members of the investing public.”
The indictment comes one week after the SEC charged Cohen with failing to supervise employees who engaged in insider trading. The SEC is seeking to ban him from the securities industry.