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Steve Cohen Won't Have To Accept Further Public Humiliation If He Doesn't Want To

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As you may have heard, yesterday SAC Capital agreed to plead guilty to insider trading and pay a $1.2 billion fine (on top of the $600+ million it already paid) in order to make a federal investigation go away. The deal has been yet to be approved by a judge, and though there is not reason to believe it won't be, it's always possible things could fall through. For instance, Richard J. Sullivan might think Cohen should pay a fine greater than this year's take-home. He might want to force Cohen to wear a poster board that says "Loads of people have insider traded on my watch" in giant letters and walk up and down the streets of Greenwich, CT. He might take issue with the lack of fine print dictating that Cohen must obtain permission from Preet Bharara to use the little boy's room. He might want to ratchet up the punishment in any of these ways; in the event he does, Cohen will have a choice between agreeing to strapping on the sandwich board or saying no dice.

Under an unusual provision, the deal gives SAC Capital the option to withdraw its guilty plea should a federal judge overseeing the settlement not approve the fine print of the final agreement. Known in legal jargon as a “C-deal,” the provision effectively gives the firm an “out” should the judge decide that SAC deserves more punishment that is outlined in the agreement. “This is a significant concession to SAC,” said Daniel W. Levy, a former assistant prosecutor for the Southern District of New York, the same office that has handled the criminal investigation of SAC. “It’s rarely employed, and it’s largely good for defendants.”

SAC’s Guilty Plea Comes With An Escape Hatch [Newsweek]


The Feds Are Struggling To Understand Why Mathew Martoma Won't Just Turn On Steve Cohen Already, God Damn It

"We have been remarkably successful in convincing persons to cooperate with the government, and provide evidence to us, and in court of law," SEC director of enforcement Robert Khuzami said during a press conference the day the government went public with its charges of insider trading against former SAC Capital employee Mathew Martoma. To the untrained ear, Khuzami probably appeared to be speaking to no one in particular, just sending a general message to any would-be criminals out there that once the government got to their co-conspirators, it'd be all over. No one wants to do time, and everybody flips. To those who've been following Operations Perfect Hedge, though, and have watched the Feds' relentless pursuit of Steven A. Cohen,  it was obvious they were sending a clear message to the Big Guy: "We got ya boy, and ya goin' down." And since its track record of getting people to turn on their colleagues and in some cases, their best friends (see: Noah Freeman/Donald Longueuil, and these guys, and these guys, and this guy) really has been "remarkably successful," and since Martoma has a wife and two young kids and his whole life ahead of him, Khuzami and Co. probably assumed they had this one in the bag. But not so.