Billionaire hedge-fund manager Steven A. Cohen declined to testify before a grand jury about allegations of insider trading at his SAC Capital Advisors LP, according to three people familiar with the matter.
Cohen, 57, made use of his Fifth Amendment right not to incriminate himself after being summoned, said the people, who asked not to be identified because the information is private. He was excused from appearing before the grand jury after informing prosecutors through his lawyers that he planned to use the right, said one of the people.
“I wouldn’t have recommended that he go in to testify given how this looks like the government is trying to build a case around Cohen, rather than investigate one,” said Thomas Gorman, a partner at law firm Dorsey & Whitney LLP in Washington. “It just seems that the government is reaching for a theory to support their beliefs.”
The $15 billion hedge-fund firm, based in Stamford, Connecticut, and its founder have moved to the center of a U.S. multi-year investigation of insider trading on Wall Street since former portfolio manager Mathew Martoma was charged in November in what prosecutors called the biggest insider-trading scheme in history. The investigation has hurt SAC’s business, with clients asking to pull billions of dollars from the fund last month.
Amid the redemptions, the firm’s 14-member investor- relations team is being cut by half, with 7 employees leaving, according to two people briefed on the matter. The group handles the firm’s relationship with outside clients.
Client Redemptions
“We have reduced our staffing consistent with our present needs,” said Jonathan Gasthalter, a spokesman for SAC Capital at Sard Verbinnen & Co.
SAC, in a June 4 e-mail, told employees it received “significant” redemptions for the second quarter, though it had no plans to give up managing other peoples’ money. Cohen and employees currently account for about $9 billion of the firm’s assets.
SAC President Tom Conheeney said in the e-mail that the firm still has a stable capital base and some key investors said they may reconsider their redemption requests once they have greater clarity of legal issues surrounding the firm.
While SAC paid a record $602 million to settle a civil case related to Martoma’s trades, the government has shown no sign of ending its scrutiny of the firm. SAC in May told clients it will no longer cooperate unconditionally with the government.