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 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.”

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