17 Mar 2013

Hedge fund pays record settlement over insider trading

11:16 am on 17 March 2013

A major hedge fund has agreed to pay a record $US614 million to US regulators to settle charges of insider trading.

SAC Capital runs a hedge fund worth $US15 billion and owner Steve Cohen did not admit or deny the charges.

The Securities and Exchange Committee described the settlement a "sharp warning" to any fund that would break the law and said it did not preclude charges against any person including Mr Cohen.

The settlement was for two different incidents at SAC Capital.

A unit of the business was accused of profiting from secret information about a drug trial from a doctor before it was made public.

Affiliate CR Intrinsic Investors settled for $US600 million on these charges.

Former SAC trader Mathew Martoma is accused of illegally obtaining confidential details about a negative clinical trial for an Alzheimer's drug. He then allegedly shared the information with SAC affiliates and sold $US960 million worth of shares in the company that made the drug, Elan and Wyeth.

Mr Martoma is still facing a criminal trial and has pleaded not guilty.

Another affiilate, Sigma Capital, settled for $US14 million over for insider trading in the shares of tech firms Dell and Nvidia.