The federal investigation of insider trading by SAC Capital Advisors LP and its founder, Steven A. Cohen, has been hampered by a lack of extensive e-mail evidence. One reason: During the period of time at the heart of the probe, July 2008, SAC automatically deleted its e-mails.

Unluckily for the U.S. government, SAC changed its policy just months later, requiring preservation of electronic communications. By then, most messages relevant to the $700 million in alleged illegal trades had been erased, according to a person familiar with the matter.

Until the fall of 2008, SAC e-mails were deleted from employee electronic mailboxes every 30 or 60 days, according to SAC General Counsel Peter Nussbaum. He was questioned in a deposition two years ago by lawyers for Fairfax Financial Holdings Ltd., which had sued SAC and other hedge funds over damage caused by short sales. SAC, a $14 billion fund, was ultimately dismissed from that case. Bloomberg News reviewed a transcript of the deposition.

Federal regulators don’t regard SAC’s lack of a formal e- mail retention policy before the fall of 2008 as evidence of any intent to hide details about the trades under investigation, according to two people familiar with the matter. The policy was in place before the government investigated the trades.

On Nov. 20, the U.S. charged Mathew Martoma, a former portfolio manager at CR Intrinsic, an SAC unit, with using material, non-public information to persuade Cohen to sell shares of two drug companies just days before negative news caused both stocks to plummet.

Wyeth, Elan

The U.S. Securities and Exchange Commission sued Martoma, 38, and the unit over the same conduct. Cohen, 56, might be added to the lawsuit, a person familiar with the matter said at the time.

U.S. Attorney Preet Bharara in Manhattan said in announcing the Martoma charges that Stamford, Connecticut-based SAC had netted $276 million in profit and avoided losses on the trades.

“This is certainly the most lucrative insider-trading scheme ever charged,” he said that day.

Martoma has pleaded not guilty and isn’t cooperating with U.S. investigators in their continuing investigation of SAC.