Steve Cohen who has a legendary reputation for delivering stellar returns consistently and for charging a huge percentage of returns as fees is again coming into insider trading focus. SEC is carrying out an investigation into a massive > $200 million insider trading case against an expert network doctor and C. R Intrinsic Advisors (affiliate of SAC Capital Advisors) for carrying out trades in pharma companies based on the results of clinical trials.
Note Steve Cohen regularly finds his name in the major insider trading scandals despite not being directly impacted. Even if Steve Cohen is not guilty it seems that a culture of unethical trading seems pervasive in his organization with his employees getting regularly arrested.
A hedge-fund manager and a doctor are at the heart of what securities regulators said Tuesday may be the largest insider-trading scheme ever pursued, a case that now has implicated one of the highest-profile investors on Wall Street.The Securities and Exchange Commission alleged that $276 million in illegal profits or avoided losses were made by investment advisers and their hedge funds, by trading ahead of negative news in July 2008 on a clinical trial involving an Alzheimer’s drug developed by Elan Corp and Wyeth, now a subsidiary of Pfizer Inc. Neither company is facing charges.
The employees of these funds SAC, Diamondback and Sigma Capital Management have been arrested by the FBI. Note Sigma Capital is a subsidiary of SAC Advisors which is led by the famous fund manager Steve Cohen who has given stunning returns in the past . In the past scandal also fingers were raised that SAC might have indulged in insider trading as well. Arrest of a SAC employee may mean that the employee may be used to get proof against Steve Cohen. Earlier he said that the insider trading regulations were vague. Note Insider Trading though illegal in all countries is widely practiced as it is very difficult to prove charges and it is not considered too big a crime. In countries like India where the rule of law is not that strict, it is done quite blatantly and invites only monetary fines at best . This has encouraged a culture of widespread insider trading profiteering.