SAC Capital, US prosecutors nearing record deal to settle insider trading case: Reports

SAC Capital and US prosecutors are reported to be nearing a deal to resolve a criminal insider trading case.

The deal could come in a matter of days, Reuters reported citing a source.

According the source for any potential deal to go through, the firm would need to admit to some liability as also a payment over $1 billion.

The settlement, whose terms are being worked out  would likely deal a blow to Stephen A Cohen and his reputation as one of the greatest stock traders of his generation.

However, according to people familiar with the billionaire trader, he had been telling people he was looking to put the nearly seven-year long investigation of his firm behind him.

The potential record-breaking penalty against a hedge fund firm comes even as Cohen, a multi-billionaire, has tried to shed assets, and has been looking to sell a part or all of his $30- million equity stake in privately held Kadmon Pharmaceuticals.

Also according to a report in The New York Times earlier this week Cohen, an avid art collector, was trying to sell two paintings by Andy Warhol.

The Wall Street Journal and The New York Times first reported the news of the potential settlement with prosecutors, with the WSJ reporting the deal might give Cohen's firm credit for agreeing to pay over $600 million earlier this year for settling a civil insider trading lawsuit filed against the firm by the US Securities and Exchange Commission.

According to earlier reports from Reuters and other news organisations, Cohen and other prosecutors were negotiating a potential settlement of up to $2 billion.

According to Reuters, Cohen had told associates he wanted to settle the criminal case against his firm.

Though SAC had denied the criminal charges of insider trading, it neither acknowledged nor rejected them in the civil settlement, the WSJ reported. 

According to the report it was not immediately clear whether Cohen would be allowed to continue to manage outside money, which had fallen dramatically with the Fed cracking down on the troubled hedge fund manager.

Meanwhile, SAC's lawyer continued to negotiate other details of the settlement, the report said.

An announcement of the deal could come early next month, ahead of the beginning of an insider trading trial of SAC portfolio manager Michael Steinberg, which is scheduled for 18 November. 

Mathew Martoma, another SAC trader is due to go on trial on 6 January.