SAC Capital Advisors, a $15bn hedge fund started by billionaire markets veteran Steven Cohen, has been indicted on fraud charges by a New York federal court just days after the government mounted a civil lawsuit against the firm, accusing it of unprecedented levels of insider trading that made the business hundreds of millions of dollars.
Manhattan prosecutors have accused the hedge fund of wire fraud and securities fraud from 1999 to at least 2010. Cohen, 57, was not named personally as a defendant in the case.
SAC's "relentless pursuit of an information edge fostered a business culture within SAC in which there was no meaningful commitment to ensure that such edge came from legitimate research and not inside information", said prosecutors.
Analysts were encouraged to pursue industry contact networks for information but the firm did not have "effective corresponding controls" to stop inside information, they added.
"The predictable result was systematic insider trading by the SAC entity defendants resulting in hundreds of millions of dollars of illegal profits and avoided losses at the expense of members of the investing public," they concluded.
In a separate but related civil lawsuit filed by the US Securities and Exchange Commission (SEC), it said that insider trading at the company was "substantial, pervasive and on a scale without known precedent in the hedge fund industry".
An SAC Capital spokesman dismissed the SEC claims as having no merit.
"Steve Cohen acted appropriately at all times," said SAC.