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Hedge Fund Founder's Ex-Wife Files Suit Accusing Him of Insider Trading
The ex-wife of Wall Street magnate Steven Cohen, founder of the $13 billion hedge fund SAC Capital Advisors, filed a civil racketeering suit in December 2009 against Cohen in which she accuses him of committing insider trading violations.
The suit, according to the New York Times, was filed in federal district court in Manhattan under a civil version of RICO laws used mostly against organized crime figures. The suit accuses Cohen of understating his income during divorce proceedings and hiding money from his ex-wife, Patricia.
Background
It has been a tough couple of months for Cohen and SAC. As the New York Times reported, the insider trading investigation surrounding Galleon Group founder Raj Rajaratnam has hit very close to SAC. One former SAC analyst, Richard Choo-Beng Lee, has already pleaded guilty to insider trading he committed well after leaving SAC in 2004; Lee, who is represented by K&L Gates partner Jeffrey Bornstein, has agreed to cooperate with authorities about any insider transactions that might have happened while he was at SAC, the Times reports. Federal authorities have also subpoenaed one former SAC analyst (Richard Grodin) and have reportedly been investigating another (Mark Adams), though neither has been charged or publicly suspect of any wrongdoing. (Nor has anyone currently at SAC.)
The Suit
In the civil RICO suit, Cohen's ex-wife says Cohen admitted to her in 1985 that he received inside information on General Electric's takeover of RCA, though Cohen indicated to her that he did not believe he committed insider trading by later profiting from that information. She also claims that Cohen funneled money through a friend of his (who happens to be a lawyer), Brett Lurie, who was later convicted of fraud and fled to Costa Rica.
The suit raises all sorts of interesting legal issues, including whether the normal statute of limitations on various fraud charges might be lifted if a court finds Cohen actively concealed his fraud.
Zach Lowe is a reporter for The American Lawyer, an ALM sister publication of this newsletter.This article first appeared on The Am Law Daily blog on www.AmericanLawyer.com.
The ex-wife of Wall Street magnate Steven Cohen, founder of the $13 billion hedge fund SAC Capital Advisors, filed a civil racketeering suit in December 2009 against Cohen in which she accuses him of committing insider trading violations.
The suit, according to the
Background
It has been a tough couple of months for Cohen and SAC. As the
The Suit
In the civil RICO suit, Cohen's ex-wife says Cohen admitted to her in 1985 that he received inside information on
The suit raises all sorts of interesting legal issues, including whether the normal statute of limitations on various fraud charges might be lifted if a court finds Cohen actively concealed his fraud.
Zach Lowe is a reporter for The American Lawyer, an ALM sister publication of this newsletter.This article first appeared on The Am Law Daily blog on www.AmericanLawyer.com.
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