SAC Capital Agrees To Plead Guilty To Insider Trading

The hedge fund giant also agreed to pay a $1.8 billion fine to settle charges. Prosecutors say that insider trading at the company was substantial, pervasive and on a scale without known precedent in the hedge fund industry.

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DAVID GREENE, HOST:

NPR's business news starts with a guilty plea.

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GREENE: SAC Capital Advisors is expected to plead guilty to securities fraud today. The hedge fund company has agreed to pay $1.8 billion to settle charges of insider trader. It's said to be the biggest fine ever in a case like this. The settlement will be announced at a news conference later today in New York City. And that's where we've reached NPR's Jim Zarroli. And Jim, explain for us, if you can, what SAC has actually agreed to here.

JIM ZARROLI, BYLINE: Well, the prosecutors say SAC was rife with insider trading. It went on for a decade, at least a decade. They say the company's founder, Steven Cohen, would hire these portfolio managers with ties with the industries they cover. And, you know, they'd regularly tap people for information about, like, upcoming earnings reports, and then they'd trade off that. They also passed on tips to Cohen himself, who traded for his own account. And this took place because the firm had such a weak compliance department. So now the firm is agreed to plead guilty but it won't actually admit wrongdoing.

GREENE: And what about the possibility of admitting wrongdoing by Cohen himself? I mean, could he face criminal charges here?

ZARROLI: He's not been charged criminally. He does face civil charges for failing to supervise his employees. He's still negotiating with the federal government about the resolution of those charges. In the past, the firm has said there's nothing to those allegations. But, you know, whatever happens - this is a huge comedown for Cohen. He has been a very prominent figure in the hedge fund world, a multi-billionaire. You know, a really big figure and as a result of this settlement, he's not going to be any longer.

GREENE: All right. That update from NPR's Jim Zarroli. Jim, thanks a lot.

ZARROLI: You're welcome.

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