Greenwich, Connecticut-based hedge fund firm SAC Capital Advisors and three of its affiliates agreed to plead guilty to insider trading charges and to pay a record $1.8 billion fine under a proposed settlement with the government. The settlement was announced Monday in a press conference held in Manhattan by United States Attorney for the Southern District of New York and the Federal Bureau of Investigation.
Under the terms of the agreement, which has to be approved by Southern District Court Judges Laura Swain and Richard Sullivan, SAC and its affiliates will plead guilty to all five counts in the original indictment against the firms, filed in July. United States Attorney Preet Bharara stressed that “no outside investor’s money will be used to pay the $1.8 billion penalty.” SAC already paid $616 million of the $1.8 billion to settle civil charges with the Securities and Exchange Commission.
The settlement agreement does not prevent further charges being bought against any of the individuals involved with the firm, nor does it end the insider trading probe. “There is no immunity from criminal prosecution. This agreement does not have any binding effect on any individuals at all, either charged or uncharged,” Bharara said. “We will continue to pursue insider trading investigations and follow the facts wherever they might lead.” The criminal investigation “remains ongoing.”
The plea did not include Steven Cohen, the founder and CEO of the $10 billion firm, who is not directly named either in the plea agreement or the July indictment. After reaching its own settlement agreement with SAC for insider trading earlier this year, the SEC has since charged Cohen with failure to supervise. Under the terms of the agreement announced today, SAC will return any remaining outside investor capital and function solely as a family office. Over the next five years the firm will, under supervision, wind down its remaining business.
"We take responsibility for the handful of men who pleaded guilty and whose conduct gave rise to SAC's liability. These wrongdoers do not represent the 3,000 honest men and women who have worked at the firm during the past 21 years. Even one person crossing the line into illegal behavior is too many and we greatly regret this conduct occurred," the firm said in a statement.
Multi-strategy hedge fund firm BlueMountain Capital Management has taken activist investing to a higher-stakes level. The $16.7 billion, New York-based hedge fund firm, which specializes in equity and credit markets investing, on Monday offered to acquire Chatham Lodging Trust for $21.50 per share in cash, or nearly $565 million. “We are prepared to work with senior management both in structuring a mutually acceptable proposal and developing an operating plan for the company in the future,” the firm said in a statement.
Chatham is a real estate investment trust (REIT) that mostly invests in upscale extended-stay and exclusive hotels, including Homewood Suites by Hilton, Residence Inn by Marriott and Hyatt House. BlueMountain asked the company to respond no later than 5:00 p.m. on November 22.
BlueMountain was founded in 2003 by Andrew Feldstein and Stephen Siderow. Earlier this year, Jes Staley, the former head of JPMorgan Chase’s investment bank, joined Blue Mountain as a a managing partner.
Starboard Value sent a 53-page letter and analysis to Randall Dearth, president and chief executive of Calgon Carbon, offering ways to boost the stock price of the company, which makes and sells products involved in the purification, separation and concentration of liquids and gases. The New York-based hedge fund firm, which owns 9.7 percent of the stock, indicated it has engaged in dialogue with the company for the past year after investing in the company in November 2012 and made a detailed presentation to the company back in January. “We have now updated this presentation and are enclosing it with this letter to encourage dialogue among shareholders, analysts and the company about the options available to Calgon to create additional value for shareholders,” states the letter, which was sent ahead of the company’s analyst meeting this week in Phoenix.
New York-based hedge fund giant Och-Ziff Capital Management Group said its OZ Master Fund, a multi-strategy fund, rose 1.03 percent in October, bringing its year-to-date gains to 10.87 percent. Its OZ Europe Master Fund gained 2.09 percent in October and is up 10.09 percent for the year, while the OZ Asia Master Fund rose 0.47 percent in October and 10.48 percent for the year. The firm also said that as of November 1, assets under management stood at $38.5 billion, which reflects a net increase of about $700 million since the previous month.
The Credit Suisse Liquid Alternative Beta Index, which aims to reflect the performance of the overall hedge fund industry, rose 1.65 percent in October. It is up 6.01 percent for the year. The Event Driven strategy was the strongest performer, rising 2.42 percent in October, and is the strongest performing strategy year-to-date, gaining 9.12 percent.
Kenneth Griffin’s Citadel disclosed a 5.3 percent stake in Ann, Inc., the retailer best known for its Ann Taylor and Loft chains.