Sayeth the SEC:
"Cohen—the founder and owner of hedge fund investment advisers that bear his initials(S.A.C.) and that until recently managed portfolios of over $15 billion—failed reasonably to supervise two of his senior employees, who engaged in insider trading under his watch. On at least two separate occasionsin 2008, two portfolio managers who reported to Cohen obtained material nonpublic information about three different publicly traded companies. Both portfolio managers provided information to Cohen indicating that they may have had access to inside information to support their trading. Based on that information, both portfolio managers engaged in unlawful insider trading. In each case, Cohen received highly suspicious information that should have caused any reasonable hedge fund manager in Cohen’s position to take prompt action to determine whether employees under his supervision were engaged in unlawful conduct and to prevent violations of the federal securities laws. Cohen failed to take reasonable steps to investigate and prevent such violations. Instead, faced with red flags of potentially unlawful conduct by employees under his supervision, Cohen allowed his traders to execute the recommended trades and stood by 2 while the portfolio managers traded in the portfolios they managed."