After five years under investigation for insider trading, Steven Cohen is considering proposing a deal to prosecutors that would shut his $15 billion hedge-fund firm to outside investors, according to a person familiar with his thinking.

Cohen has discussed an agreement under which his SAC Capital Advisors LP would admit wrongdoing but wouldn’t be prosecuted unless it broke the law again, said the person, who asked not to be named because the talks are private. As part of the deal, known as a deferred prosecution agreement, Cohen would close the Stamford, Connecticut-based firm to outside investors and make it a family office that manages his personal fortune. SAC Capital probably would also pay a fine.

That Cohen would ponder a deferred prosecution agreement suggests the 56-year-old billionaire sees it as unlikely that he could fight criminal insider-trading charges and continue to run a hedge fund. Prosecutors, who have already linked at least nine current or former employees to insider trading while at SAC Capital, probably wouldn’t accept an agreement that let Cohen off the hook, said John Coffee a professor at Columbia University School of Law.

“I don’t think they would regard a criminal prosecution against the company as a victory without a conviction against Cohen,” Coffee said.

Still, the government has been increasing its use of deferred prosecution and non-prosecution agreements over the past decade. The Justice Department entered 35 such deals in 2012, compared with two in 2002, according to a review by law firm Gibson, Dunn & Crutcher LLP.

Powerful Tool

In February, Royal Bank of Scotland Plc entered into such a deal in connection with the manipulation of Libor benchmark interest rates. As part of that agreement, RBS admitted to criminal violations, agreed to pay $150 million and institute a corporate compliance program. In agreeing to defer prosecution, the Justice Department cited the bank’s thorough cooperation with their investigation.

“One of the reasons why deferred prosecution agreements are such a powerful tool is that, in many ways, a DPA has the same punitive, deterrent, and rehabilitative effect as a guilty plea,” Lanny Breuer, then an assistant U.S. attorney general, said in a speech to the New York Bar City Association in September.

“When a company enters into a DPA with the government, or an NPA for that matter, it almost always must acknowledge wrongdoing, agree to cooperate with the government’s investigation, pay a fine, agree to improve its compliance program and agree to face prosecution if it fails to satisfy the terms of the agreement,” he said. “All of these components of DPAs are critical for accountability.”

Filing Deadline

Jonathan Gasthalter, a spokesman for SAC Capital at Sard Verbinnen & Co., declined to comment on a possible deal, as did Ellen Davis, a spokeswoman for U.S. Attorney Preet Bharara. Neither Cohen nor SAC Capital has been accused of wrongdoing by the U.S. attorney.

Cohen was sent a subpoena last week to appear before a federal grand jury, a second person with knowledge of the matter said. After Cohen was summoned, SAC Capital told clients in a May 17 leter that it was no longer cooperating unconditionally with the government. The firm expects “substantially more clarity” in coming months, according to the letter, portions of which were provided to Bloomberg News.

A five-year statute of limitations will expire at the end of July for the U.S. Attorney in Manhattan to criminally charge Cohen with illegally selling shares of two stocks based on tips received by Mathew Martoma, a former fund manager at his firm. The Martoma case was the first to link Cohen directly to alleged insider information. Martoma has pleaded not guilty.

The U.S. Securities and Exchange Commission, which won a record $602 million civil settlement with SAC Capital over the trades in March, also must move by July to sue Cohen personally.

Redemption Requests

Investors asked to pull $1.68 billion from the firm as of the first quarter. Some clients of Blackstone Group LP, one of Cohen’s biggest investors, asked the manager to put in redemption notices for the second quarter, said a person familiar with the matter. SAC Capital is talking with Blackstone about keeping some money with the firm, said the person, who asked not to be named because the fund is private.

Christine Anderson, a spokeswoman for New York-based Blackstone, declined to comment. The fund had about $550 million invested with the firm at the beginning of the year.

Cohen accounts for $7 billion of the money invested in SAC funds, according to data compiled by Bloomberg, meaning that a Cohen-run family office would still be bigger than many hedge funds. He has returned about 30 percent a year since starting the firm in 1992, one of the best records in the industry’s history.