SAC Capital Advisors Settles Insider Trading Case for $10M
SAC Capital Advisors has consented to pay $10M to resolve a securities case brought by shareholders of pharmaceutical company Wyeth. The plaintiffs contend that they sustained losses because the hedge fund had been insider trading in the drugmaker’s stock.
The class action securities lawsuit was brought following the arrest a few years back of Mathew Martoma, an ex-SAC Capital portfolio manager. After he was convicted last year of insider trading for using confidential outcomes of a clinical trial involving an Alzheimer’s drug, Martoma was sentenced to nine years behind bars in 2014. According to prosecutors, Martoma’s trades allowed the hedge fund to make $275M.
Other settlements have already been reached over this matter, including a $1.8B settlement with US authorities as well as a guilty plea by SAC Capital. An SAC Capital unit also settled insider trading claims involving Wyeth and Elan Corp. stock—Elan and Wyeth had been developing the Alzheimer’s drug together—for $602M.
SEC Announces Settlement with Two Chinese Traders Over Insider Trading Case
The U.S. Securities and Exchange Commission says that business associates and cousins Yannan Liu and Zhichen Zhou, who are traders in Hong Kong and China, respectively, have consented to pay over $920,000 to resolve insider trading charges. The two of them will disgorge their entire ill-gotten gains as well as pay penalties.
According to the regulator, Liu and Zhou traded Chindex International and MedAssets Inc. stocks because of nonpublic information they received about their upcoming acquisitions by private equity firms. Liu had been a private equity associate at a company that was connected to both deals.
The two traders settled without denying or admitting to the SEC charges. Their assets were frozen last month after the SEC filed its complaint against them.
Ex-Goldman Sachs Director’s Insider Trading Appeal is Rejected Again
An appeals court has turned down ex-Goldman Sachs Group Inc. (GS) director Rajat Gupta’s latest challenge to his criminal conviction for insider trading. Gupta was convicted in 2012 for passing tips to billionaire hedge fund manager Raj Rajaratnam about Berkshire Hathaway’s $5B investment in Goldman, as well as details about the bank’s financial results from the last half of 2008.
Gupta, who is scheduled to be released in early 2016, even took his appeal all the way to the U.S. Supreme Court, which refused to hear his claims. He had hoped to benefit from a ruling in another case last year, which found that prosecutors have to prove that defendants knew the insider trading tips came from a person who not only had a duty to keep the information secret but also would benefit personally from leaking the information.
That decision went on to undermine over a dozen convictions that Manhattan U.S. Attorney Preet Bharara had won. The ruling by the US Second Circuit Court of Appeals refuses once again to overturn the jury’s decision of a guilty verdict against Gupta.
SAC Capital to pay $10 million in investors’ insider trading lawsuit, Reuters, December 24, 2015
Traders in China and Hong Kong Paying $920,000 to Settle Insider Trading Case, SEC, December 28, 2015
Court rejects Rajat Gupta’s appeal, yet again, Business Insider, December 30, 2015