This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why Wall Street Won't Let Cohen's SAC Capital Hang: Street Whispers

Stocks in this article: GS MS JPM BAC

SAC's Cohen is reported to have held a conference call this morning to reassure clients about SAC Capital's business. Bloomberg reports that Cohen said on the call the SEC has filed a 'Wells Notice' against the fund, but not himself personally.

For SAC, the call was likely also a move to stem any possible outflow of client money from the fund.

Normally outflows and a drop in a fund's so-called net asset value are the quickest way for Wall Street banks to cut and run from a fund. However, while SAC's investors may very well be flighty, its unlikely the firm's trading counterparts are preparing to hang Cohen out to dry anytime soon.

Bloomberg reports the funds investors see a Nov. 20 charges against a former portfolio manager, Matthew Martoma and his trading of Elan (ELN) and Wyeth shares as concerning because they indicate Cohen may have been a participant in the alleged insider trading.

Earlier in November, U.S. Attorney Preet Bharara may have hooked his biggest insider trade, after unveiling new allegations against a SAC Capital Management trader that raises the prospect the worst is yet to come for the hedge fund and its founder Steven A. Cohen.

The U.S. attorney's charge alleges that former SAC trader Mathew Martoma was able to make $276 million in profit and avoided losses on the shares of Elan (ELN) and Wyeth by way of trading on illegal knowledge of negative trials in an Alzheimer's drug being developed by both companies.

While allegations do not mention Cohen by name, they repeatedly refer to a "Hedge Fund Owner" as receiving Martoma's advice to sell shares and instructing the hedge fund to liquidate large blocks of stock.

The charge against Martoma is the sixth time a current or former SAC worker has been linked to insider trading while working at the company.

Already, two former SAC Capital traders and an analyst at the hedge fund have pleaded guilty to insider trading, and a former portfolio manager Michael Steinberg has been named as an unindicted co-conspirator, but is yet to be charged.

"Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government's inquiry," Jonathan Gasthalter, a spokesman for SAC Capital, said last week.

Martoma's lawyer, Charles A. Stillman, said last week he expected the former portfolio manager to be "fully exonerated."

-- Written by Antoine Gara in New York

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs