Analyst's arrest puts Cohen's SAC in spotlight again
The arrest on Wednesday of technology analyst Jon Horvath marks the fourth time in two years that U.S. authorities have implicated or charged a person with engaging in insider trading while working at SAC Capital. It is the latest to come from an investigation FBI agents have coined Operation Perfect Hedge.buy runescape gold
Federal authorities did not charge Cohen or SAC Capital with any wrongdoing in the case against Horvath, who is accused of using inside information to help the Stamford, Connecticut-based hedge fund generate a $1 million profit from trading in shares and option contracts of PC maker Dell Inc..
Horvath's lawyer could not immediately be reached for comment.
The case against Horvath comes less than a month after SAC Capital capped another successful year, generating an 8 percent return while most hedge funds lost money in 2011.
But the new allegations of improper trading are a fresh reminder that SAC Capital remains a major focal point for U.S. prosecutors as they continue a multi-yearcheap runescape gold crackdown on insider trading in the $1.7 trillion hedge fund industry.
And while industry observers and investment managers say the newest case is not likely to prompt investors to rush to pull money from Cohen's fund, it could cause some discomfort for some of his wealthy patrons.
"There is a feeling that the Feds' web around Cohen might be slowly tightening and that is bound to get people to think about what to do with their money," said one industry investor familiar with Cohen's fund but who asked not to be named.
A spokesman for Cohen's SAC declined to comment beyond saying that the firm is continuing to cooperate with the government investigation.RuneScape gold
It is no secret in the hedge fund world that the federal authorities have been probing possible wrongdoing at SAC for years. Reuters previously has reported federal prosecutors and regulators have been investigating allegations of improper trading at SAC Capital since at least 2007.
But it was not until last year that those years of investigation began to get uncomfortably close for Cohen when two former traders, Noah Freeman and Donald Longueuil, pleaded guilty to insider trading charges. Another former SAC Capital employee, Jonathan Hollander, settled civil charges of insider trading with the Securities and Exchange Commission.
Now that a fourth SAC Capital employee has been accused of improper trading, hedge fund industry analysts, lawyers and investors say the scrutiny of Cohen's roughly 800 employees is bound to increase.
"I suspect that remaining with a fund that's implicated is just bad business from a reputational standpoint," said Nicole Boyson, a finance professor at Northeastern University, who has researched the implications of hedge fund fraud.
Over the years, SAC Capital, in response to other trading scandals, has noted that it has some of the strongest compliance systems in the hedge fund industry. But in a deposition taken last year in a civil lawsuit, a copy of which was obtained by Reuters, Cohen said federal laws on insider trading were "very vague."Runescape accounts
To be sure, Cohen, a 55-year old trader who founded SAC Capital in 1992 with just $25 million, continues to maintain a large reservoir of support. And a good deal of that stems from the fact that Cohen himself has never been charged with wrongdoing and that despite the negative headlines, SAC Capital continues to post strong returns.
"It is unfortunate, but I do not think Steve is involved with this and, yes, we have money with him and I stand by him," said Anthony Scaramucci, who runs Skybridge Capital which featured Cohen as a prominent speaker at his investment conference last year.
