Bloomberg News

SAC Capital Sued by Elan Investors Over Alleged Illegal Trading

July 25, 2013

SAC Capital Advisors LP and its founder Steven A. Cohen were sued by another group of Elan Corp. investors seeking to recoup money SAC allegedly made from illegally trading the company’s securities.

SAC’s agreement in March to settle Securities and Exchange Commission claims disgorged only a fraction of the Stamford, Connecticut-based hedge fund’s gains from insider trading of securities of companies including Elan, according to the investors’ complaint filed in Manhattan federal court yesterday.

SAC, which may be charged by U.S. prosecutors as early as today as part of an insider-trading probe according to a person familiar with the matter, agreed to disgorge $275 million as part of its settlement without admitting or denying the SEC’s allegations. The new complaint is at least the third such lawsuit since former SAC portfolio manager Mathew Martoma was charged with insider trading in November.

SAC gained $549 million from the illegal trading in Elan (ELN:US) securities, according to the investors’ complaint. The investors are seeking to recoup those gains, as well as $396 million in prejudgment interest, less $260 million SAC paid the SEC, for a net amount of $686 million, according to the complaint.

A public pension fund holding Wyeth LLC shares sued in April with similar claims and another group of Elan investors filed a similar suit in December.

SAC spokesman Jonathan Gasthalter didn’t immediately respond to an e-mail requesting comment after normal business hours. He has previously said that the $14 billion hedge fund and Cohen acted appropriately in connection with the Elan and Wyeth trades.

The case is Adams v. S.A.C Capital Advisors LP. 13-CV-5181. U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net


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