The Securities and Exchange Commission charged two affiliates of well-known hedge fund SAC Capital Advisors with illegal insider trading Friday, resulting in the largest ever insider-trading financial penalties.
CR Intrinsic Investors and Sigma Capital Management, which are linked with Steven Cohen's SAC Capital Advisors, separately agreed to pay $614 million and give up $14 million in gains to settle the SEC's charges. The settlement with CR and Sigma, in which the firms didn't admit or deny guilt, is the largest paid in an insider trading case and one of the largest financial penalties charged by the SEC.
"These settlements call for historic penalties," says SEC Acting Enforcement Director George Canellos in a press conference. "We can't tolerate a market rigged for the benefit of insiders and their cronies."
The charges against the companies center around so-called "expert networks," which the SEC alleges allow people with illegally obtained information to funnel it to traders to avoid losses or make gains.
TVNL Comment: Why are drug deals punishable by long jail terms, and insider trade deals handed a fine? Just asking....