View source for S.A.C. Capital Advisors

{{Short description|Group of hedge funds}}
{{Infobox company
|name     = SAC Capital Advisors, L.P.
|logo          = [[File:SAC logo.svg]]
|type          = [[Limited Partnership|L.P.]], Private
| founded = 1992
|defunct       = 2016 (converted into [[Point72 Asset Management]] in 2014)
|founder       = [[Steven A. Cohen]]
|location      = [[Stamford, Connecticut]]<br>United States
|industry      = [[Hedge fund]]s
|aum           = $16 billion (2008)
|owner         = [[Steven A. Cohen]]
| num_employees = 800 (2010)
}}
'''SAC Capital Advisors''' was a group of [[hedge fund]]s founded by [[Steven A. Cohen]] in 1992. The firm employed approximately 800 people<ref name="Steve Cohen's Trade Secrets">[https://www.bloomberg.com/news/2010-02-26/steve-cohen-s-trade-secrets.html Steve Cohen's Trade Secrets] [[Bloomberg.com]], February 26, 2010</ref> in 2010 across its offices located in [[Stamford, Connecticut|Stamford]], [[Connecticut]] and [[New York City]], and various offices.<ref name="BloombergBusinessweek2003July21VickersMarcia">{{cite magazine|last1=Vickers|first1=Marcia|title=The Most Powerful Trader on Wall Street You've Never Heard Of|url=https://www.bloomberg.com/news/articles/2003-07-20/the-most-powerful-trader-on-wall-street-youve-never-heard-of|access-date=25 July 2006|agency=Bloomberg L.P.|magazine=Bloomberg Businessweek|date=21 July 2003|location=United States|language=en|url-access=subscription}}</ref> It reportedly lost many of its traders in the wake of various investigations by the [[U.S. Securities and Exchange Commission|Securities and Exchange Commission]] (SEC).<ref name="online.wsj.com">{{cite news| first=Rob | last=Copeland | title=SAC Capital Outperforms Peers in 2013 | date=December 31, 2013 | url=https://online.wsj.com/news/articles/SB10001424052702304591604579292692691772608 | work=The Wall Street Journal}}</ref> In 2010, the SEC opened an [[insider trading]] investigation of SAC<ref name="MarketWatch2010November23BarrAlistair">{{cite web|last1=Barr|first1=Alistair|title=SAC Tells Investors It Got Government Subpoena|url=https://www.marketwatch.com/story/sac-tells-investors-it-got-government-subpoena-2010-11-23|access-date=15 October 2013|agency=Dow Jones & Company Inc|website=MarketWatch|date=23 November 2010|location=San Francisco, United States|language=en }}</ref> and in 2013 several former employees were indicted by the [[U.S. Department of Justice]].<ref name="Reuters July 2013">{{cite news | url=https://www.reuters.com/article/us-sac-fund-charges-idUSBRE96O0SD20130725 | title=U.S. charges SAC Capital with insider trading crimes | work=Reuters | date=July 25, 2013 | access-date=July 31, 2013 | author=Flitter, Emily}}</ref> In November 2013, the firm itself pleaded guilty to [[insider trading]] charges and paid $1.2 billion in penalties (in addition to $616 million already paid to the SEC).<ref name="NewYorkTimes2013November4ProtessBen">{{cite news|last1=Protess|first1=Ben|last2=Lattman|first2=Peter|title=After a Decade, SAC Capital Blinks|url=https://dealbook.nytimes.com/2013/11/04/after-a-decade-sac-capital-blinks/|access-date=6 November 2013|agency=The New York Times Company|issue=DealBook|page=B1|newspaper=New York Times|date=4 November 2013|location=New York, N.Y., United States|language=en}}</ref> The firm shrank after returning the vast majority of its outside investor capital (i.e., not controlled by Steven Cohen personally). [[Point72 Asset Management]] was established as a separate [[family office]] in 2014. SAC ceased to exist as a separate entity in 2016.<ref>[https://www.adviserinfo.sec.gov/IAPD/IAPDFirmSummary.aspx?ORG_PK=161111 SEC Investment Adviser Public Disclosure (IAPD)]</ref> Point 72, essentially the continuation of SAC, manages 30 Billion as of 2023. <ref>{{Cite web |title=What we do |url=https://point72.com/what-we-do/}}</ref>
== History==
The company's name 'SAC Capital' derived from Steven A Cohen's initials.<ref name="FinancialTimes2017February16GapperJohn">{{cite news|last1=Gapper|first1=John|title=How Steven Cohen survived an insider trading scandal|url=https://www.ft.com/content/efda2ca2-ec69-11e6-930f-061b01e23655|access-date=23 May 2017|agency=Nikkei|newspaper=Financial Times|date=16 February 2017|language=en|url-access=subscription }}</ref> The company started trading with $25 million in 1992, grew its assets under management to $16 billion, and became the world's highest-returning hedge fund: SAC averaged annual returns of 30% net of fees under a 3% management fee and 50% performance fee from 1992 to 2013. The company's strategy was the "[[Mosaic theory (investments)|mosaic theory of investing]]" which develops investment positions based on stock information from many sources.<ref name="Reuters July 2013"/> SAC focused on trading liquid, large-cap stocks and later began using fundamental and quantitative strategies.<ref name="InstitutionalInvestor2008June26">{{cite magazine|title=Steve Cohen "I don't think any of us got into this business thinking we would make the money we've ended up making. But that's the American way."|url=https://www.institutionalinvestor.com/article/b18bl3d0q8l3zm/steven-cohen|access-date=15 October 2013|agency=Institutional Investor LLC|magazine=Institutional Investor|date=26 June 2008|language=en|url-access=limited}}</ref> The company had $14 billion in [[assets under management]] across four independent portfolios at the start of 2013.<ref>{{cite magazine| url = https://www.forbes.com/sites/afontevecchia/2014/03/13/steve-cohen-personally-made-2-3b-in-2013-despite-having-to-shut-down-sac-capital/|title=Steve Cohen Personally Made $2.3B In 2013 Despite Having To Shut Down SAC Capital|author= Agustino Fontevecchia |magazine=[[Forbes]] |date =March 13, 2014}}</ref> According to ''[[Bloomberg BusinessWeek]]'' magazine, SAC Capital Advisors daily trading activity accounted for as much as 3% of the [[New York Stock Exchange]]'s daily trading and up to 1% of the [[NASDAQ]]'s daily trades. SAC Capital maintained offices in Stamford, Connecticut; New York City; Hong Kong; Tokyo; Singapore; London; Boston; San Francisco; and Chicago.<ref name=ReutersDec09>{{cite news |title=SAC Capital grows in Asia with Singapore office |first=Parvathy |last=Ullatil |date=December 4, 2009 |work=Reuters |url=https://www.reuters.com/article/sac-asia-idUSHKG13621520091204 }}</ref><ref name=InstitutionalInvestorMar10>{{cite news |title=Inside SAC's Shark Tank |first=Britt Erica |last=Tunick |date=March 1, 2010 |work=Institutional Investor |url=http://www.institutionalinvestorsalpha.com/Article/2400624/Search/Inside-SACs-shark-tank.html }}</ref>
On December 9, 2013, SAC agreed to sell its reinsurance business, SAC Re, to a group of investors led by insurance-industry veteran [[Brian Duperreault]].<ref>{{cite news| url =https://finance.yahoo.com/news/sac-agrees-sell-reinsurance-business-233544619.html|title= SAC agrees to sell reinsurance business to investor group|author= Jennifer Ablan|work= [[Yahoo! Finance]] |date = December 9, 2013}}</ref>
===Biovail===
In March 2006, ''[[60 Minutes]]'' reported on a lawsuit against SAC filed by [[Biovail]], a [[Canadians|Canadian]] pharmaceutical company which alleged that SAC had manipulated reports on Biovail in order to drive the price of the stock down. SAC denied the charges and said that the stock was overvalued and that the decline was due to shortfalls in earnings and regulatory investigations.<ref name="CBSNews2006March26StahlLesley">{{cite news|last1=Stahl|first1=Lesley|title=Betting On A Fall|url=https://www.cbsnews.com/news/betting-on-a-fall/|access-date=27 May 2008|agency=CBS Interactive Inc.|issue=60 Minutes|publisher=CBS News|date=26 March 2006|location=United States|language=en}}</ref> In August 2009, the New Jersey Superior Court dismissed all of Biovail's claims against SAC Capital.<ref name="NewYorkTimes2009August21KouweZachery">{{cite news|last1=Kouwe|first1=Zachery|title=Judge Dismisses Biovail's Suit Against Hedge Fund|url=https://www.nytimes.com/2009/08/21/business/21sac.html|access-date=30 October 2019|agency=The New York Times Company|page=B2|newspaper=New York Times|date=21 August 2009|location=New York|language=en}}</ref> On February 10, 2010, SAC Capital filed a lawsuit in federal court in Connecticut seeking damages from Biovail for filing "vexatious" litigation against them in 2006.<ref>{{cite news|url=https://www.reuters.com/article/idUSN1912430020100219 |title=SAC Capital turns the tables on Biovail |work=Reuters |date=February 19, 2010|access-date=October 15, 2013}}</ref> The lawsuit was settled out of court in November 2010.<ref name="phx.corporate-ir.net">[http://phx.corporate-ir.net/phoenix.zhtml?c=90887&p=irol-newsArticle&ID=1491637&highlight= Valeant Pharmaceuticals Press Release], November 4, 2010</ref> Under the settlement, Biovail's new owner, [[Valeant Pharmaceuticals]], paid $10 million to SAC.<ref name="NewYorkTimes2010November4">{{cite news|title=Biovail Settles With SAC Capital|url=https://dealbook.nytimes.com/2010/11/0l/|access-date=10 April 2017|agency=The New York Times Company|issue=DealBook|newspaper=New York Times|date=4 November 2010|location=United States|language=en}}</ref>
===Fairfax Financial Holdings ===
In July 2006, SAC Capital Advisors was one of three industry participants that were sued by [[Fairfax Financial Holdings]] Ltd (FFH) and accused of conspiring to manipulate the company's stock price. FFH alleged SAC Capital and two other hedge funds paid analyst John Gywnn and his employer [[Morgan Keegan]] to publish negative reports on FFH and drive its stock price down.<ref>{{cite news|last=Weidlich |first=Thom |url=https://www.bloomberg.com/apps/news?pid=20601087&sid=a1DyqLgTdy38 |title=Chanos Saw Nonpublic Fairfax Research, E-Mails Show (Update3) |publisher=Bloomberg |date=February 13, 2009 |access-date=October 15, 2013}}</ref> In December 2008, Fairfax Financial Holdings provided email exchanges as evidence to the court amongst the hedge funds and Gywnn, that discussed the content of the soon-to-be-published report on FFH.<ref>{{cite magazine| url = https://www.bloomberg.com/news/2012-03-16/morgan-keegan-loses-dismissal-bid-in-8-billion-fairfax-suit-1-.html|title= Morgan Keegan Loses Dismissal Bid in $8 Billion Fairfax Suit|author= Thom Weidlich|magazine=[[Bloomberg Businessweek]] |date = March 16, 2012 }}</ref> In September 2011, the Superior Court in [[Morris County, New Jersey]], granted SAC Capital Advisors’ motion for [[summary judgment]] and removed SAC Capital Advisors, Sigma Capital Management, a division of SAC Capital Advisors, and Steven Cohen as defendants from the case.<ref name="NewYorkTimes2011September14AhmedAzam">{{cite news|last1=Ahmed|first1=Azam|title=Judge Drops SAC Capital as Defendant in Civil Suit|url=https://dealbook.nytimes.com/2011/09/14/judge-drops-sac-capital-as-defendent-in-sac-capital/|access-date=30 October 2019|agency=The New York Times Company|issue=DealBook|newspaper=New York Times|date=14 September 2011|language=en}}</ref> Judge Stephan C. Hansbury wrote in his judgement: “There is no direct evidence of any sort of conspiracy involving SAC to take down Fairfax."<ref>{{cite news| url=https://www.reuters.com/article/saccapital-lawsuit-idUSS1E78D0VH20110914 | work=Reuters | title=Cohen's SAC Capital scores legal win over Fairfax | date=September 14, 2011}}</ref>
===Insider trading cases===
A 2013 article in ''[[Yahoo! Finance]]'' reported that SAC Capital Advisors had been under investigation by the Securities and Exchange Commission (SEC) for six years.<ref name="YahooFinance2013July25NestoMatt">{{cite news|last1=Nesto|first1=Matt|title=SAC Capital Indicted for Criminal Securities Fraud|url=https://finance.yahoo.com/blogs/breakout/sac-capital-indicted-criminal-securities-fraud-155459600.html|access-date=25 July 2013|agency=Verizon Media|work=Yahoo Finance|date=25 July 2013|language=en}}</ref> In November 2010, the SEC conducted raids at the offices of investment companies run by former SAC traders.<ref>{{cite news|last=Pulliam |first=Susan |url=https://www.wsj.com/articles/SB10001424052748704243904575630693960704872?mod=WSJ_hp_mostpop_read |title=FBI Raids Hedge Funds as Insider-Trading Probe Widens  |publisher=Online.wsj.com |date=November 22, 2010 |access-date=2013-10-15}}</ref> Several days later, SAC received what they described as "extraordinarily broad" subpoenas.<ref name="MarketWatch2010November23BarrAlistair" /> In February 2011, two former employees were charged with insider trading.<ref name="NewYorkTimes2011February8LattmanPeter">{{cite news|last1=Lattman|first1=Peter|last2=Ahmed|first2=Azam|title=Insider Inquiry Steps Up Its Focus on Hedge Funds|url=https://dealbook.nytimes.com/2011/02/08/3-hedge-fund-managers-face-insider-trading-charges/|access-date=30 October 2019|agency=The New York Times Company|issue=DealBook|newspaper=New York Times|date=8 February 2011|location=United States|language=en }}</ref> In November 2012, federal prosecutors levied charges against additional former SAC Capital traders.<ref name="NewYorkTimes2012November20LattmanPeter">{{cite news|last1=Lattman|first1=Peter|title=Insider Inquiry Inching Closer to Billionaire|url=https://dealbook.nytimes.com/2012/11/20/federal-prosecutors-charge-former-sac-capital-trader/|access-date=30 October 2019|agency=The New York Times Company|issue=DealBook|page=A1|newspaper=New York Times|date=20 November 2012|location=New York|language=en}}</ref><ref name="NewYorkTimes2013March15LattmanPeter">{{cite news|last1=Lattman|first1=Peter|title=SAC Capital to Pay $616 Million in Insider Trading Cases|url=https://dealbook.nytimes.com/2013/03/15/sac-settles-insider-trading-cases-for-616-million/|access-date=15 March 2013|agency=The New York Times Company|issue=DealBook|page=A1|newspaper=New York Times|date=15 March 2013|location=New York|language=en}}</ref> [[Portfolio manager]] Michael Steinberg was arrested in March 2013 and accused of using inside information to make $1.4 million in profits for SAC Capital.<ref name="ABCNews2013March29KaterskyAaron">{{cite news|last1=Katersky|first1=Aaron|title=Hedge Fund Manager Michael Steinberg Charged With Insider Trading|url=https://abcnews.go.com/blogs/business/2013/03/hedge-fund-manager-charged-with-insider-trading/|access-date=29 March 2013|agency=ABC News Network|publisher=ABC News|date=29 March 2013|language=en}}</ref>  While awaiting a jury verdict, Steinberg fainted, recovered, and was convicted.<ref>{{Cite news|last=Matthews|first=Christopher M.|date=2013-12-19|title=SAC's Steinberg Convicted in Insider-Trading Case|language=en-US|work=Wall Street Journal|url=https://online.wsj.com/article/SB10001424052702304773104579266554036539982.html|access-date=2021-01-31|issn=0099-9660}}</ref>  He was sentenced to three-and-a-half years in prison and ordered to pay a $2 million fine.<ref>{{Cite web|title=SAC's Michael Steinberg Sentenced to 3.5 Years for Insider Trading|url=https://www.pbs.org/wgbh/frontline/article/sacs-michael-steinberg-sentenced-to-3-5-years-for-insider-trading/|access-date=2021-01-31|website=Frontline|language=en-US}}</ref>  After the United States Supreme Court declined to review a United States Court of Appeals for the Second Circuit ruling on two related insider trading convictions, which made it difficult to prosecute insider trading cases, Mr. Steinberg’s conviction was dismissed.<ref>{{Cite news|last=Goldstein|first=Matthew|date=2015-10-22|title=U.S. Prosecutor to Drop Insider Trading Cases Against Seven (Published 2015)|language=en-US|work=The New York Times|url=https://www.nytimes.com/2015/10/23/business/dealbook/us-prosecutor-to-drop-insider-trading-cases-against-seven.html|access-date=2021-01-31|issn=0362-4331}}</ref>
In July 2013, SAC Capital was charged with conspiracy and securities fraud, citing the actions of 8 current and former employees.<ref>{{cite web|url=http://www.jdjournal.com/2013/06/06/judge-sets-sacs-martoma-trial-for-inside-trading-to-november-4/ |title=Judge Sets SAC's Martoma Trial for Inside Trading to November 4 |date=6 June 2013 |publisher=JD Journal |access-date=2013-10-15}}</ref> With the conviction of [[Mathew Martoma]] on February 6, 2014, and after a four-week trial, a total of eight former SAC Capital employees were either convicted at trial or pleaded guilty.<ref>{{cite web|url=https://www.cnbc.com/2014/02/07/sac-still-on-hook-in-insider-trading-probe-source.html|title=SAC still on hook in insider trading probe: Source|publisher=CNBC|date=February 7, 2014|access-date=February 7, 2014}}</ref> In October 2015, cases against two of the employees were dropped.  In June 2019, another employee successfully vacated his plea, and prosecutors later dropped the case, filing a ''nolle prosequi'', marking 3 of the 8 original pleas/convictions being dropped.
In July 2013, the SEC filed a civil suit against SAC for failing to properly supervise its traders.<ref name="Reuters July 2013"/><ref name="YahooFinance2013July25NestoMatt" /> Additionally, the U.S. Department of Justice "filed a five count criminal indictment by a federal grand jury, including four counts of securities fraud and one count of wire fraud."<ref name="YahooFinance2013July25NestoMatt" /> SAC said it would "vigorously fight" the accusations and charges,<ref name="Reuters July 2013"/><ref name="YahooFinance2013July25NestoMatt" /> but shortly thereafter, in November 2013, SAC Capital agreed to plead guilty to all counts of the indictment, stop managing funds for outsiders, and pay a $1.2 billion fine.<ref name="NewYorkTimes2013November4ProtessBen" />  It already agreed to $616 million in fines and penalties, totally 1.8 billion. This was split between a $900 million fine in the criminal case and a $900 million forfeiture judgment in a civil money laundering and forfeiture action.<ref>{{Cite web|title=Manhattan U.S. Attorney Announces Guilty Plea Agreement with SAC Capital Management Companies|url=https://www.fbi.gov/newyork/press-releases/2013/manhattan-u.s.-attorney-announces-guilty-plea-agreement-with-sac-capital-management-companies|access-date=2021-01-31|website=FBI|language=en-us}}</ref> Trading teams at SAC have since left to join competing hedge funds such as [[BlueCrest Capital Management]], [[Millennium Management, LLC|Millennium Management]], and [[Balyasny Asset Management]].<ref name="online.wsj.com"/> On September 8, 2014, Martoma was sentenced to 9 years in prison and was ordered to forfeit nearly $9.4 million, more than his net worth.<ref name="MartomaSentencing">{{cite news|title=Nine years prison term given to ex-SAC manager|url=https://www.cnbc.com/2014/09/08/martoma-ordered-to-forfeit-938-million.html|date=September 8, 2014|access-date=September 8, 2014|publisher=CNBC}}</ref>
== See also==
*''[[Billions (TV series)]]''
*[[Chip Skowron]], former SAC Capital healthcare analyst, later convicted of insider trading and sentenced to five years.
==References==
{{Reflist|2}}
{{Hedge funds}}
[[Category:Companies based in Stamford, Connecticut]]
[[Category:Hedge fund firms in Connecticut]]
[[Category:Financial services companies established in 1992]]
[[Category:Hedge funds]]
[[Category:Defunct hedge funds]]