Saturday, March 16, 2013
Out the Kleptocracy: CR Intrinsic Investors Fund pays $600M to Settle Insider Trading Charges
Hedge fund CR Intrinsic Investors will pay more than $600 million in what federal regulators are calling the largest insider trading settlement ever.
The Securities and Exchange Commission charged the firm with insider trading in 2012, alleging that one of its portfolio managers illegally obtained confidential details about an Alzheimer's drug trial from a doctor before the final results went public and made trades from that information.
The SEC said Friday that the fund agreed to settle the charges and the parties neither admit nor deny the charges.
"The historic monetary sanctions against CR Intrinsic and its affiliates are a sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm," George S. Canellos, acting director of the SEC's Division of Enforcement, said in a statement.
The SEC said in its complaint that Sidney Gillman, a doctor who moonlighted as a medical consultant, tipped CR Intrinsic portfolio manager Mathew Martoma with safety data and eventually negative results in the trial of the drug made by drug firms Elan Corp. and Wyeth two weeks before they were made public in 2008. Martoma and CR Intrinsic then caused several hedge funds to sell more than $960 million in Elan and Wyeth securities in a little more than a week.
And yet, it's somehow, it's never prosecuted as a crime...