Bloomberg News

SAC Capital’s InterMune Trades Said to Be Probed by FBI

December 08, 2012

SAC Capital Advisors LP Steven A. Cohen

Steven "Steve" Cohen, chairman and chief executive officer of SAC Captial Advisors LP. Photographer: Scott Eells/Bloomberg

SAC Capital Advisors LP’s trading in InterMune Inc. (ITMN:US) in 2010 as well as trades in Weight Watchers International Inc. (WTW:US) last year are being investigated by the U.S., a person familiar with the matter said.

The trades by the $14 billion fund owned by Steven A. Cohen are under scrutiny by U.S. Securities and Exchange Commission and the Federal Bureau of Investigation, said the person, who asked not to be identified because the matter wasn’t public.

The government is looking at trades that SAC made in Brisbane, California-based InterMune in the first half of 2010, the person said. Some of those InterMune transactions were handled by Nikej Shah, the person familiar with the matter said. Shah, a former SAC portfolio manager, declined to comment on the probe.

Jonathan Gasthalter, a spokesman for $14 billion SAC, said yesterday the firm wasn’t aware of any investigation involving trades of Weight Watchers or InterMune.

Jerika Richardson, a spokeswoman for Manhattan U.S. Attorney Preet Bharara, and John Nestor, a spokesman for the U.S. Securities and Exchange Commission, declined to comment on the case. Jim Margolin, a spokesman for the FBI’s New York office, declined to comment on the probes.

InterMune Trades

SAC bought 1.9 million shares of InterMune in the first quarter of 2010, after holding none in the prior two quarters, and held 10,983 shares at the end of the second quarter of 2010, according to data compiled by Bloomberg.

InterMune’s stock soared in the first week of March after the drugmaker’s experimental medicine for a deadly lung disease was reviewed more favorably by U.S. regulators than analysts had expected. Two months later, the stock slumped after the company’s application for a potential $1-billion-a-year lung treatment was rejected by regulators.

Trading records also show SAC held Weight Watchers during a period when the price doubled.

Last month, former SAC fund manager Mathew Martoma was charged with insider trading for using nonpublic information to trade the stocks of drugmakers Elan Corp. (ELN:US) and Wyeth LLC, earning $276 million for the fund.

Owner’s Sale

SAC’s owner sold the stocks after speaking with Martoma, according to prosecutors and an SEC complaint, which was the first time they had linked him to trades at the center of an insider case. Another person familiar with the matter said Cohen is the person identified in the criminal complaint as “Hedge Fund Owner” and in the SEC’s suit as “Investment Advisor A.”

Cohen hasn’t been charged with a crime.

SAC held 2.1 million shares of Weight Watchers at the end of the first quarter of 2011 compared with 7,951 shares in the previous quarter, according to data compiled by Bloomberg. Weight Watchers surged in February 2011 after forecasting full- year earnings that beat analyst estimates.

The hedge fund cut its holdings in the second quarter of 2011, holding 77,857 shares as of June 30, 2011. The stock slumped in the first week of August after the firm increased spending on advertising and technology during the second quarter.

To contact the reporters on this story: Saijel Kishan in New York at skishan@bloomberg.net; Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editors responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net; Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • ITMN
    (InterMune Inc)
    • $73.89 USD
    • -0.02
    • -0.03%
  • WTW
    (Weight Watchers International Inc)
    • $24.67 USD
    • 0.16
    • 0.65%
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