SAC Capital, the hedge fund founded by billionaire Steven A. Cohen, is expected to plead guilty in a federal court Monday to fraud charges that could result in a record fine of more than $1 billion, people familiar with the matter said Monday.
Details of the accord—including a guilty plea to at least one count of securities fraud—are expected to be made at 1 p.m. ET, bringing to a close a major chapter in a case that has wended its way through courts for five years. The settlement requires a judge's approval.
Lawyers for SAC and the U.S. Attorney's Office in Manhattan spent the last week finalizing the settlement, which will involve the filing of an amended set of charges to which the $13 billion hedge fund will plead guilty, people familiar with the matter have said.
The settlement will not include an admission of promoting insider trading within the firm, one source said.
Besides the plea, which will at least temporarily halt SAC's run as a hedge fund managing public money, the company will be fined $1.8 billion — about $600 million of which has already been paid as part of a prior case's resolution, added this person. The figure would be a record amount for the Manhattan U.S. Attorney, and a large amount for the Justice Department overall.
A spokesman for SAC declined comment on the matter and spokesmen for the Southern District of New York U.S. Attorney's Office, which is handling the case, didn't respond to a request for comment.
SAC will not immediately settle separate civil charges, levied this past summer by the Securities and Exchange Commission, that Cohen failed to supervise employees who engaged in insider trading, said one of the people familiar with the matter.
Nonetheless, as part of the imminent government settlement, SAC will lose the right to manage public money, by surrendering its investment-advisor registration with the SEC, this person said.
The details of how that conversion will work are still being determined. After a brief grace period in which it will redeem the rest of the public money it currently manages, SAC will convert to a family office that manages at Cohen's personal wealth. estimated to be at least $9 billion.
Staff layoffs in addition to the ones it has already made in the U.S. and London are possible, this person said, but the details have yet to be determined.