Federal Prosecutors File Criminal Charges against SAC Advisory Entities and SEC Charges an SAC Trader

The Department of Justice announced that it is bringing criminal charges for insider trading against SAC advisory companies responsible for a group of affiliated hedge funds.

The alleged offenses were committed over the span of more than a decade by numerous employees involved in the securities of over 20 publicly traded companies. It is charged that the acts were made possible by institutional practices that enabled the use of material, non-public inside information resulting in hundreds of millions of dollars in illegal profits and avoided losses.

The SEC has also announced charges against former SAC portfolio manager, Richard Lee, for insider trading in the securities of Yahoo! Inc. ("Yahoo") and 3Com Corporation ("3Com"). The SEC alleges that Lee made trades in 2009 based on non-public information regarding the Microsoft-Yahoo partnership and the acquisition of 3Com by Hewlett-Packard, resulting in gains of more than $1.5 million.

The charges were filed following a "Failure to Supervise" charge against Steven A. Cohen.

See: DOJ Press Release; DOJ Charging and Supporting Documents; SEC Press Release; SEC Complaint against Richard Lee.See also: SEC Files Civil Charges against SAC (Brad Bondi Interview on CNBC Closing Bell) (July 23, 2013); SEC Charges Cohen With Failing to Supervise Portfolio Managers and Prevent Insider Trading (with Lofchie Comment) (July 19, 2013).