Cohen barred from managing investor funds for 2 years

Cohen “failed reasonably to supervise one of his senior employees, who engaged in insider trading”, the SEC said.

It’s a big win for Cohen, who had been facing a lifetime ban under the original charges filed by the SEC.

In 2013, SAC Capital Advisors pleaded guilty to securities fraud charges. In addition, Cohen’s current firm – which replaced SAC and only mainly invests Cohen’s personal fortune – was required to submit to SEC inspections and to hire an independent consultant to monitor its compliance with securities laws. Cohen has neither denied the charges nor admitted guilt, but the portfolio manager, Mathew Martoma, is now serving nine years in a low-security prison in Miami. Cohen was not criminally charged.

As part of its plea deal with the government, SAC stopped taking in funds to manage from outside investors – transforming into a “family office” investing mainly Cohen’s money.

SAC Capital would go on to return outside investor capital, and rebrand itself as Point72 Asset Management, which manages the wealth of Cohen and the firm’s employees.

Before handling outside money again, Cohen will need to have an independent consultant ensure that he has sufficient safeguards to detect and deter insider trading.

But in December 2014, the Second U.S. Circuit Court of Appeals in NY overturned the insider-trading convictions of two hedge-fund portfolio managers, saying it wasn’t enough for prosecutors to show that someone who received an inside tip traded on material nonpublic information about a corporation.

In October, prosecutors cited that ruling and dropped the case against Mr. Steinberg and six others, who had cooperated in the investigation and previously pleaded guilty.

Cohen said in the letter that this settlement with the SEC doesn’t mean the firm can become complacent.

The SEC order included a provision that extends the length of the settlement terms in case the Commission brings a new action against Cohen, a related entity, or an employee under his supervision. But rather than raise any red flags, Cohen rewarded Martoma with a $9 million bonus, according to the SEC.

The prospect of a Cohen comeback follows a decision by the SEC to weaken its case against him.

Point72 did not offer immediate comment on Cohen’s statement, in which he says Point72 can expect to again be able to manage outside investments effective January 1, 2018 if the company maintains “world class” comliance programs and ethical standards. “Our firm has focused on generating replicable and sustainable high quality returns that yield prudent growth and we will continue to do so for the next two years”.