The Securities and Exchange Commission says that billionaire Steven Cohen will not be allowed to supervise funds that oversee outside money or take on a supervisory position at any brokerage firm or investment adviser firm until 2018. The temporary bar is to resolve charges accusing him of not properly supervise Mathew Martoma. The ex-portfolio manager committed insider trading while at CR Intrinsic Investors. That firm is a subsidiary of S.A.C Capital Advisors LLC, which Cohen founded.<\/p>\n
Cohen had been barred for life from the securities industry over said violations, although he was never charged in criminal court. However, because of an appeals court ruling in another case which impacted his case, hence the revised settlement. This latest deal will have caused Cohen to be barred from managing outside money for four years. He’s already been restricted for two of those four years.<\/p>\n
The regulator says that before Cohen will be allowed to deal with external funds again an independent counsel will have to make sure that legally adequate procedures, policies, and supervisory mechanisms are implemented so that possible incidents of insider trading in the future are detected and stopped.<\/p>\n
The SEC\u2019s order also said that Cohen had ignored warning signs that should have compelled him to act immediately to find out whether or not Martoma was doing something illicit. Instead, he allowed him to make trades while making similar trades in accounts that he controlled. As a result of the insider trading, Cohen\u2019s hedge funds made money while avoiding losses of about $275M.<\/p>\n