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SAC Capital Faces Civil and Criminal Fraud Charges

SAC Capital, one of America’s most famous investment firms, has officially been charged with insider trading in separate criminal and civil cases.

U.S. Attorney General for New York, Preet Bharara, said, “SAC trafficked in insider information on a scale without any known precedent in the history of hedge funds. As described the indictment, the scope of insider trading was deep and it was wide. It spanned more than a decade in time, involved securities of at least 20 companies, extended across multiple sectors of the economy and benefited SAC to the tune of at least 100’s of millions of dollars.”

And yet, that’s not all of the claims against SAC Capital. There are claims of wire tapping and money laundering at the $15 billion firm. Now, the government is hoping to reclaim an unspecified amount of money.

Former SEC enforcement lawyer, Jacob Frenkel, said, “I think we would have seen it if they had that case. The implication is that maybe they will sometime in the future but they are not there yet. I don’t think it’s critical. If one of the objectives here is to take SAC Capital out of the market, this is the shot gun blow to the stomach. It is pushing the back so far it may devastate the company even short of an actual conviction.”

And Hilary Kramer, of A&G capital, says that the implications will be far-reaching for Wall Street.

“Investment banks all over Wall Street have made money – they make money on commissions, trading with SAC. In fact, I have learned that up to five percent of the commissions of trading on the Big Board come from SAC.”

Predictably, SAC has stated that the actions of a few don’t reflect the entire firm, and it says it is working on a deal to operate as normal. That includes protecting the legitimate interests of “all parties.”