Post date: Nov 05, 2013 2:55:12 PM
Reuters Market Access Online -
So why is this such a landmark case? I mean what is different about SAC Capital here?
RUSSELL DUNCAN, FORMER FEDERAL PROSECUTOR AND SEC TRIAL LAWYER:
Well, the sheer number is what's most significant - $1.2 billion in this settlement, this guilty plea, another $600 million in an earlier settlement with SAC Capital. It dwarfs by a magnitude of probably 10 times the biggest insider trading fine or settlement in the history of the United States government.
ANCHOR (OFF-CAMERA) ENGLISH SAYING:
They did not charge individuals here, although they made it clear there is immunity. How do you read that?
RUSSELL DUNCAN, FORMER FEDERAL PROSECUTOR AND SEC TRIAL LAWYER:
Well, I think they're keeping their options open. Obviously, individuals had to be responsible for the actual acts of the entity. I think to date, six individuals have plead guilty from SAC Capital; two are still awaiting trial; most interestingly is what the Department of Justice is going to do about Mr. Cohen's case. It would almost be remarkable to assume that all of these individuals at his company would have been trading on insider information without his knowing it. I understand there may be some issue of whether or not the government can actually make the link to Mr. Cohen's conduct. But it would seem very strange that someone in his position would not know what was going on. So I don't think his troubles are over yet, at least with respect to the Department of Justice.
But he himself has not been charged with any criminal wrongdoing. He's still got $9 billion of his own money that he can manage.
RUSSELL DUNCAN, FORMER FEDERAL PROSECUTOR AND SEC TRIAL LAWYER:
Yes, that's right. I believe that most of the money that was in SAC capital that was not his has fled the fund but he still has his $9 billion. He can do with it what he wants, you assume and hope that he would do it in a legal manner.
Alright. You have 30 years experience in this field. How is this case different I mean in the way that insider trading has evolved and the culture of firms like SAC Capital?
RUSSELL DUNCAN, FORMER FEDERAL PROSECUTOR AND SEC TRIAL LAWYER:
Well, obviously, the Southern District of New York, the US attorney there has taken this as one of his principal missions to root out insider trading. Obviously, we've seen several prosecutions in this area. My guess is that we're going to continue to see more. It's not unusual and I think we've seen it in other points where the market has been very robust as it has been more or less over the last half dozen years. But you know, obviously with some exception from the financial crisis. But in that milieu what you're seeing is a lot of people trading, a lot of people wanting to get whatever edge they can. So I think that the rewards, the risk rewards for people acting on insider trading information and going close to the line and then going over the line has increased. So the understanding that I have from the reports I've read is that the government's taking a very strong interest in policing this market. Obviously, markets don't run well if one person gets to cheat while the other has to play by the rules.
But you have said this is actually a good deal for SAC Capital. I mean given how much money they made, I mean you think that they kept a lot effectively.
RUSSELL DUNCAN, FORMER FEDERAL PROSECUTOR AND SEC TRIAL LAWYER:
It's pretty remarkable when you think about it. Obviously, it's impossible and certainly beyond my capabilities to match the trades, to find out how much of this was legitimately earned money and how much of it was illegitimately earned money. Obviously, the government has said at least $1.2 billion in this deal and $600 million in the other deal were illegitimate earnings. But it would seem strange that someone would be this successful and be cheating this much and not be cheating in other trades. So you know it becomes, at that point, almost like a cost of doing business. If you just do the math, even at $2 billion, if he's putting in $2 billion approximately of his own money in these settlements, he's still left with $7 billion. That's pretty much enough to buy you groceries.