SAC Capital receives subpoena over suspected insider trading

SAC Capital, the giant hedge fund run by billionaire Steven Cohen, told its investors that it has received an "extraordinarily broad" subpoena, as the US authorities widened their investigation into suspected insider trading on Wall Street.

Mr Cohen's firm was the highest-profile among several to disclosure requests for information yesterday, a day after the FBI raided three hedge funds. More raids are expected in the coming days, and prosecutors are aiming to make arrests and lay charges within weeks.

The subpoena does not zero in on particular individual securities, sectors or trading strategies, SAC said in a letter to investors, and does not "shed much light on whom or what the government may be investigating".

The letter went on that neither the subpoena nor any other information of which the firm is aware suggests that anyone at SAC has engaged in wrongdoing, and it said it intended to cooperate with the government "professionally".

Wall Street is bracing for further revelations, even as traders complain privately that federal authorities may be widening the definition of insider trading and conducting fishing expeditions against powerful hedge fund managers, such as Mr Cohen.

Shares in Janus Capital, a Colorado mutual fund manager, were briefly suspended from trading while it disclosed that it had received a request for information from investigators, as did Boston-based Wellington Management.

Like SAC, Wellington and Janus were among a number of firms which used the services of Broadband Research, an "expert network" company which puts hedge funds in touch with experts from industries and companies in which they are interested. Broadband's founder, John Kinnucan, went public to describe how FBI officers had asked him to participate in a wiretap of his clients - something he declined to do. He says Broadband and its clients have never participated in any insider dealing.

The latest raids have reignited rumours that the authorities were pursuing wrongdoing at SAC which, with assets under management of around $12bn, is one of the world's largest hedge funds and also one of the most voracious in pursuing information on which to base its trading strategies. Mr Cohen has been dogged by rumours of insider trading for many years, though his defenders say the suggestion is the result of jealousy over his firm's persistently strong performance.

In a withdrawn lawsuit, Mr Cohen's ex-wife accused him of insider trading early in his career. A former employee was one of those who pleaded guilty in the case against hedge fund star Raj Rajaratnam last year, and two of the three firms raided on Monday - DiamondBack Capital Management and Level Global Investors - are run by former managers from SAC, including Mr Cohen's brother-in-law. The third firm raided was Loch Capital Management.

Mr Cohen defended himself in an interview with Vanity Fair in July. "I've had a rough six months," he told the magazine. "I could not understand it, what the hell was going on. It was like a circus, a fucking circus. Well, things are finally calming down. The press is moving on. This story will be the last anyone reads about me for a while, I think."

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor