Judge Signs Off on Portion of $1.8B Plea Agreement in Insider Trading Suits

Judge Signs Off on Portion of $1.8B Plea Agreement in Insider Trading Suits

 NEW YORK — (Mealey’s) The federal judge in New York overseeing the U.S. government’s civil forfeiture action against a hedge fund and certain of its related entities on Nov. 6 granted approval of a plea deal that will see the defendants paying $1.8 billion to settle claims that they engaged in a massive insider trading scheme (United States of America v. SAC Capital Advisors LP, et al., No. 13-5182, S.D. N.Y.).

U.S. Judge Richard J. Sullivan of the Southern District of New York signed off on the stipulation and order, which requires SAC Capital Advisors LP and related entities SAC Capital Advisors LLC, CR Intrinsic Investors LLC and Sigma Capital Management to pay $900 million to settle wire fraud and securities fraud claims filed by the government as part of a civil forfeiture action. 

The plea agreement is also contingent upon U.S. Judge Laura T. Swain of the Southern District of New York signing off on a $900 million plea agreement in the related criminal action against the defendants, and it provides for a $616 million credit for monies the defendants paid to settle claims with the Securities and Exchange Commission earlier this year.

Grand Jury Indictment

The government filed its complaint in the civil forfeiture action on July 25 in the District Court, two days after a federal grand jury indicted the defendants on wire fraud and money laundering charges for their roles in the insider trading scheme.

U.S. Attorney Preet Bharara of the Southern District of New York sent a copy of the plea agreement to Judge Sullivan and Judge Swain on Monday outlining the claims against the defendants and seeking approval of the plea agreement.

In its civil complaint, the government alleged that the defendants engaged in a massive insider trading scheme that the government deemed to be “substantial, pervasive, and on a scale without known precedent in the hedge fund industry.”

Counsel

The government is represented by Bharara and Assistant U.S. Attorneys Antonia M. Apps, Arlo Devlin-Brown, John T. Zach, Sharon Cohen Levin, Christine I. Maglo and Micah W.J. Smith.

The defendants are represented by Martin Klotz, Michael S. Schachter and Alison R. Levine of Wilkie Farr & Gallagher and Theodore V. Wells Jr., Daniel J. Kramer and Michael E. Gertzman of Paul, Weiss, Rifkind, Wharton & Garrison.  All are in New York.

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