SAC Capital, the hedge fund owned by S.A. Cohen, admitted to five criminal charges and agreed to pay a fine of $1.2 billion. They have already paid $600 million.
Reason - insider trading
The total fine, $1.8 billion, consists of illegal gains ($900 million) and penalty ($900 million).
As Mr. Cohen owns 100% of the firm, he will pay the fine himself, leaving him with about $7 billion (he has recently bought a painting for $150 million and property for $60 million).
Why was the firm investigated in the first place? It had returns that were had to believe ( 30% per year).
When did the investigation start bearing fruit? When someone provided information into the workings of the company.
What is "too big to jail? " This is an issue that has been bothering economists and some politicians. Following the Great Recession, nobody went to jail. Typically, firms paid fines and admitted no wrongdoing. So the bankers were "too big to jail".
You will see commentary that the too big to jail is over. But for this really to happen, the government needs to charge the company owner, Mr. Cohen, one of the most powerful people in finance.
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