A federal judge approved a $602 million settlement between securities regulators and an SAC Capital Advisors L.P. unit despite expressing his reservations over the language of the agreement.
The settlement resolves a case against CR Intrinsic Investors L.L.C. over trades made by a former portfolio manager, Mathew Martoma, in stock of two pharmaceutical firms. A criminal case against Martoma, who has denied any wrongdoing, is ongoing.
Under the terms of the settlement, CR Intrinsic, a unit of Stamford hedge fund SAC Capital, agreed to pay $602 million to resolve a civil insider trading case while neither admitting nor denying wrongdoing. The SEC has described the payment as the largest ever in an insider trading case.
In Manhattan, U.S. District Court Judge Victor Marrero expressed reservations that the settlement allows CR Intrinsic to make a payment to resolve allegations it benefited from illegal trades without the firm having to admit guilt.
“In this age when the notion labeled ‘too big to fail’ (or jail, as the case may be) has gained currency throughout commercial markets, some cynics read the concept as code words meant as encouragement by an accommodating public – a free pass to evade or ignore the rules, a wink and a nod as cover for grand fraud, a license to deceive unsuspecting customers,” Marrero wrote in his April 16 decision.
