SEC Settles with Steven A. Cohen on Charge of Failure to Supervise

The SEC agreed to settle charges against hedge fund manager Steven A. Cohen for failing to reasonably supervise a former portfolio manager who engaged in insider trading. The portfolio manager was employed at CR Intrinsic Investors, an investment advisory firm that was a wholly-owned subsidiary of S.A.C. Capital Advisors LLC, an entity founded and controlled by Cohen. The SEC found that Cohen ignored red flags that should have caused him to take prompt action to determine whether the portfolio manager was engaged in insider trading.

Under the terms of the settlement, Cohen is prohibited from serving in a supervisory role at any broker, dealer, or investment adviser until 2018, and further, for any registered or unregistered firm that Cohen directly or indirectly owns, Cohen must retain an independent consultant to review such firm’s compliance with federal securities laws, and must submit to on-site SEC examinations for such firms until at least 2018.