SEC Settles S.A.C. Capital Insider Trading Case for $600 Million

SEC v. CR Intrinsic Investors, LLC et al., Case No. 12 Civ. 8466 VM (S.D.N.Y.).  On March 18, 2013, the SEC announced it settled insider trading charges against CR Intrinsic Investors, an affiliate of S.A.C. Capital for more than $600 million.  The SEC charged CR Intrinsic with insider trading in November 2012, alleging that portfolio manager Mathew Martoma obtained inside information about a clinical trial from Dr. Sidney Gilman, who was selected by pharmaceutical companies Elan Corporation and Wyeth to present the final drug trial results to the public.  After receiving the tip, Martoma and CR Intrinsic caused several hedge funds to sell more than $960 million in Elan and Wyeth stock.  In an amended complaint filed March 15, 2013, the SEC added investment advisory firm S.A.C. Capital Advisors, LLC and hedge funds CR Intrinsic Investments, LLC, S.A.C. Capital Associates, LLC, S.A.C. International Equities, LLC, and S.A.C. Select Fund, LLC as relief defendants.  Without admitting or denying the charges, CR Intrinsic agreed to pay $274,972,541 in disgorgement, $51,802,381.22 in prejudgment interest, and a $274,972,541 penalty.  This is the largest financial penalty ever obtained by the SEC in an insider trading case.  The case against Martoma continues.

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