Hedge Fund to Pay Record $614M for Insider Trading

Two affiliates of a major hedge fund agreed today to pay $614 million in the biggest-ever insider trading settlement on Wall Street, the New York Times reports. One affiliate of SAC Capital, CR Intrinsic, agreed to pay $600 million after a worker was accused of using confidential data on drug makers Elan and Wyeth to make trades. That worker still faces criminal and civil charges. In the smaller case, Sigma Capital Management approved a $14 million payment over charges of insider trading on Dell and Nvidia stocks.

Now the SEC is trumpeting the settlements: "The historic monetary sanctions ... are sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable," said an official. SAC also spun the tale happily, calling the settlement "a substantial step toward resolving all outstanding regulatory matters." And the hedge fund will pay the bill through its management company, thereby leaving investors off the hook. (Is this a newly inspired SEC? The commission recently accused Illinois of deceiving investors and suspected insider trading in the big Heinz deal.)