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 U.S. District Judge Laura Taylor Swain in Manhattan issued an order
directing the parties to address how to calculate the proposed
penalty and the qualifications of a newly appointed compliance
consultant.
The judge also asked if the government's conclusions about SAC
Capital's profits and avoided losses take into account activities by
"all culpable persons" or just the eight employees already convicted
on insider trading charges.
The order came ahead of a hearing Thursday in which Swain is
expected to weigh whether to accept SAC Capital's November guilty
plea to fraud charges and approve a fine of $900 million, part of a
$1.2 billion deal unveiled last year.
The sentencing is expected to mark the end of an era for SAC
Capital, which on Monday officially rebranded itself Point72 Asset
Management as it shifted toward being a so-called family office
managing mostly Cohen's own fortune, estimated by Forbes recently at
$11.1 billion.
An indictment unveiled in July alleged a culture of systemic insider
trading from 1999 through 2010, when employees at SAC Capital
engaged in insider trading in the stocks of more than 20
publicly-traded companies.
Eight current or former SAC Capital employees have been convicted on
insider trading charges. The firm itself entered a guilty plea in
November to five counts of wire fraud.
Cohen has not been criminally charged, but faces an SEC
administrative action seeking to bar him from the securities
industry for failing to supervise two employees and prevent insider
trading. He denies wrongdoing.
The $900 million criminal penalty Swain is being asked to consider
would come on top of another $900 million judgment approved in
November by a different judge in a related civil forfeiture case.
The civil judgment gives SAC Capital credit for $616 million in
earlier insider trading settlements with the U.S. Securities and
Exchange Commission, leaving an additional $1.2 billion in penalties
as part of the criminal accord.
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While the civil portion has already been approved, SAC Capital has
the right to withdraw both its guilty plea and its agreement to pay
in the forfeiture action if Swain does not sign off on the $900
million in penalties.
In her order Tuesday, Swain asked about the qualifications of Bart
Schwartz, a former federal prosecutor tapped to serve as a
compliance consultant to SAC Capital as part of the deal, and what
steps the government took in deciding whether to approve him.
She asked whether the compliance consultant's responsibilities would
be limited to reviewing SAC's policies and procedures or if the job
would also entail looking at how they are implemented.
The judge also asked if an "upward departure" was warranted under
part of the federal sentencing guidelines that specifies a harsher
punishment may be warranted if a company failed to have an effective
compliance and ethics program.
The $900 million is already above the $411.5 million to $822.9
million recommended by the federal sentencing guidelines, according
to a court filing by the government last week.
Representatives for Manhattan U.S. Attorney Preet Bharara and for
Point72 declined comment. Schwartz did not immediately respond to a
request for comment.
The case is U.S. v. SAC Capital Advisors LP, U.S. District Court,
Southern District of New York, No. 13-00541.
(Editing by Eric Walsh)
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