Promoted
Business

Steve Cohen Unclear On Insider Trading Rules In 2011 Deposition

In footage obtained by Frontline from a 2011 deposition, the billionaire hedge fund manager stumbles over his own firm’s compliance rules and is vague on what constitutes insider trading.

Steven A. Cohen’s hedge fund SAC capital will pay $1.8 billion fines for violating laws that Cohen once described as “very vague.”

SAC Capital, plead guilty Monday to five counts of wire and securities fraud in what U.S. Attorney Preet Bharara described as insider trading “on a scale without any known precedent in the history of hedge funds.” The fund agreed to pay $1.2 billion in penalties to settle the charges in addition to over $600 million SAC paid in a SEC settlement in March and to shut down its investing of outside money.

While Cohen himself was not charged criminally — although he does face a civil suit from the Securities and Exchange Commission — he does own the hedge fund and because of withdrawals from outside investors and restrictions imposed by the settlement, the firm’s assets under management are now mostly his $9 billion fortune.

The FBI’s investigation of Cohen’s hedge fund, including criminal charges against eight former employees, was not the only insider trading investigation Cohen and his fund faced. As part of a civil suit against SAC by the Canadian insurance company Fairfax Financial Holding, Cohen was deposed for two days in February, 2011 and asked about his interpretation of insider trading rules and his firm’s policy to prevent trading on private, illegally obtained information. The suit was dismissed.

Frontline, the PBS investigative series, obtained footage from a two day long deposition where Fairfax’s attorneys quiz Cohen on what he thinks of securities laws. Cohen is often evasive and even combative in response to the lawyers’ questions.

“The way I understand the rules on trading inside information, it’s very vague.”

View this embed ›

“Have you ever taken it upon yourself to actually read the rules? “I rely on my counsel.”

View this embed ›

“If the story was not coming out in a relatively short period of time, if there were ambiguity on that, I think it might be OK.”

View this embed ›

Check out more articles on BuzzFeed.com!

Matthew Zeitlin is a business reporter for BuzzFeed News and is based in New York. Zeitlin reports on Wall Street and big banks.
Contact Matthew Zeitlin at matt.zeitlin@buzzfeed.com
 
 
More News
More News
Now Buzzing