Steven A. Cohen's SAC Capital Advisors hedge fund pleaded guilty to fraud charges Friday as part of a $1.2 billion deal to resolve a long-running insider trading investigation, but the judge on the case reserved her decision about whether to accept the plea until after a pre-sentencing report was filed.
At a court hearing in Manhattan, SAC general counsel Peter Nussbaum entered the guilty plea to four counts of securities and one count of wire fraud charges, a crucial step toward ratification of the fund's record insider trading accord. (See Nussbaum's plea agreement http://static.reuters.com/resources/media/editorial/20131108/allocution.pdf )
U.S. District Judge Laura Taylor Swain said she would refrain from deciding about whether to accept the plea until after she read the pre-sentencing report. She scheduled the sentencing hearing for March 14.
As part of the plea, Nussbaum listed former employees who had been convicted of insider trading charges and described their offenses.
"On behalf of SAC, I want to express our deep remorse for the misconduct of each individual who broke the law while employed at SAC," he said.
"This happened on our watch, and we are responsible for that misconduct."
Ethan Wohl, a lawyer for investors in a lawsuit related to another pending SAC insider trading case, urged Swain not to accept the plea.
He called it a "no-admit" plea and said, "The proposed plea would let the defendants plead out without acknowledging they did what was alleged in the indictment."
He also said that the judge should not allow SAC to "cherry-pick the offense that will have the least collateral damages."
Under the plea agreement SAC reached with prosecutors, the hedge fund has agreed to pay $900 million in penalties to resolve the criminal case unveiled against it in July.
A federal judge on Wednesday signed-off on another $900 million judgment in the companion civil forfeiture action filed at the same time against SAC.
Under the civil deal, the hedge fund will only have to pay $284 million, after getting credit for $616 million in settlements in related insider trading cases by the U.S. Securities and Exchange Commission.
SAC has reserved its right to withdraw its plea if Swain does not impose the penalties negotiated with prosecutors.
(Reporting By Nate Raymond and Joseph Ax; writing by Emily Flitter; Editing by Bernard Orr)