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." Follow @agara2004 -- Written by Antoine Gara in New York