SAC Capital, Insider Trading and the Southern District

SAC Capital, Insider Trading and the Southern DistrictIt would be old news already if the case had not garnered so many superlatives.  One of the country’s most famous hedge fund managers.  The largest insider trading investigation in history.  The biggest fine ever, $1.8 billion.  The rare case against a company.

Eight current or former SAC employees have been charged.  Six have already pleaded guilty.  One is currently on trial, the other one awaiting his.

What’s groundbreaking about the SAC Capital case is that the U.S. Government actually made the case against a company, not just individuals.  There are not many precedents.  It’s a move that has often proven fatal, Arthur Andersen comes to mind.

If I were a betting person, I’d bet it’s not Preet Bharara’s last.  At the New York Times Deal Book conference I went to at the beginning of the month right after the plea, Bharara reiterated what he has said in the media over and over:  that too much is being made of the dire consequences of companies getting indicted/convicted; that it’s the era of corporate accountability; that it’s the right thing where the wrongful acts are pervasive and substantial.

“Casual and rampant and routine insider trading tells everybody at precisely the wrong time that everything is rigged and only people who have millions of dollars and have access to and are best friends with people who are on boards of directors of major companies, they’re the only ones who can make a true buck, “ he said to Time more than 18 months ago. There is nothing to add.

As always, if you have questions or comments, please call, e-mail or tweet me @Bettina Eckerle.

Eckerle Law offers legal advice in a variety of transactional and regulatory matters and serves companies’ plenary business law needs. Its founder, Bettina Eckerle, is a veteran of Debevoise & Plimpton and Wachtell, Lipton, Rosen & Katz.  She also served as the General Counsel of two companies en route to IPO. Please visit the Eckerle Law website for more details.