“To Catch A Trader” Follow-Up

SAC Capital pled guilty to the charges of insider trading and paid a $1.8 billion while
simultaneously agreeing to cease the management of outsider funds.1 However, despite the
firm’s guilty charge, the founder of the firm Steven Cohen remained profitable while paying the
$1.8 billion fine himself.2 In total, he resulted in earning $2.3 billion and is currently holding a net
worth of $12 billion.3 Steven Cohen was able to avoid a sentence in jail even though SAC
Capital was accused guilty of insider trading. By paying all of the fines out of his own pocket, he
was able to appease the feds. Furthermore, eight former SAC employees had been charged
with insider trading. SAC was structured like a wheel - there were about 100 portfolio managers
who were in charge of their own case with Cohen as the center of this group. When missing
some trace during a few pivotal weeks in 2008, there was no strong connection between him
and the criminal, making it more difficult to convict Cohen personally. Although the 7 years of
investigation included processes such as wiretaps, unearthed documents, and undercover
informations, the government still cannot collect enough evidence to charge Cohen himself with
insider trading. The law is still unclear in regard to convicting people of insider trading.4

Some of the other major players of this crime were not as lucky as Steven Cohen.
Winifred Jiau, a tech industry consultant who gave many hedge fund managers inside tips, was
convicted of insider trading and is serving an undisclosed sentence based on the $3 million she
helped provide.5 Another player, Raj Rajartnam was charged in 2009 for insider trading and was
convicted on all fourteen counts charged against him.6 He is now serving an 11 year sentence.
His brother, Rengan, was also charged in 2013 on securities fraud but was found innocent the
following year.78

While justice was served on many accounts in this case, there is little doubt that insider
trading will continue to be a problem on Wall Street.

1 http://money.cnn.com/2014/04/10/investing/cohen-sac-capital-point72/
2 Ibid
3 http://www.forbes.com/profile/steve-cohen/
4 http://www.bloomberg.com/bw/articles/2014-01-02/why-sac-capitals-steven-cohen-isnt-in-jail
5 http://www.forbes.com/sites/walterpavlo/2011/09/21/winifred-jiau-gets-4-years-in-prison-and-what-a-
journey/#e15130915c33
6 http://www.biography.com/people/raj-rajaratnam-17175738
7 http://www.newyorker.com/news/john-cassidy/has-steven-a-cohen-bought-off-the-u-s-government
8 http://fortune.com/2014/02/06/sac-guilty-verdict-what-it-means-for-steven-cohen/