Approximately four months ago, the hedge fund company owned and run by Steve Cohen agreed to pay the SEC approximately $616 million to settle allegations relating to insider trading.
At the time of the settlement, attorneys for SAC told the court that SAC was willing to pay the large sum because it wanted to put the matter behind them. A few days ago, the SEC announced new civil charges against Steve Cohen, individually.
There are at least four potential unintended consequences of the SEC’s action:
1. Steve Cohen might decide to fight the new administrative action. If he doesn’t fight it and agrees to the sanction the SEC is seeking, he will be out of business because he will be banned from managing money for others. (Or he may not. Mr. Cohen has amassed a large enough fortune that he might just put this matter behind him and manage his own money.) If he fights, there is a chance that he could avoid this severe penalty. In any case, the SEC has substantially harmed his business by spooking his investors with this second action.