New York (AFP) – Hedge fund billionaire Steven Cohen was barred from managing outside money through 2018 under a settlement related to insider trading announced Friday by the Securities and Exchange Commission.
The SEC charged Cohen with failing to supervise former SAC Capital portfolio manger Matthew Martoma, who was convicted of insider trading and sentenced in 2014 to nine years in prison.
Cohen must also retain through December 2019 an independent compliance consultant at his firm, which was renamed Point 72 in April 2014 to manage Cohen’s fortune.
However, the settlement imposes no financial penalty on Cohen and opens the door for him to manage outside money.
That had appeared unlikely in 2014 when SAC Capital paid a $1.8 billion fine after agreeing to plead guilty to criminal insider trading charges.
“Before Cohen can handle outside money again, an independent consultant will ensure there are legally sufficient policies, procedures, and supervision mechanisms in place to detect and deter any insider trading,” said Andrew Ceresney, head of the SEC’s enforcement division.
“The strong combination of a two-year supervisory bar and additional oversight requirements achieves significant and immediate investor protection and deterrence, while ensuring that the activities of his funds are closely monitored going forward.”
The settlement resolves the last major question overhanging Cohen over the SAC case. Cohen avoided criminal prosecution even as his firm was charged by the Justice Department.
A Point 72 spokesman declined comment.
Point 72 was set up as “family office” to manage Cohen’s fortune and that of some family members and employees. Forbes estimates Cohen’s wealth at $12 billion.
Cohen, in an email to Point 72 employees seen by AFP, said he decided to settle to close the book on the SAC controversy.
“Inevitably, some will ask why I agreed to settle,” Cohen said.
“The longer the pending litigation lingered, the more it distracted from the world-class firm that we are building. Resolving the case gives us certainty and opens a path to raising outside capital in the future if we believe that is in best interest of the firm.”
Cohen said Point 72 “must continue to do business at the highest ethical and professional levels and in a way that is fully transparent to our regulators, counterparties, future employees, and potential future investors.