Remarks as Prepared for Delivery by FBI Special Agent in Charge April Brooks at Press Conference Concerning SAC Capital
|FBI New York November 04, 2013|
The following remarks were prepared for delivery by FBI New York Special Agent in Charge April Brooks at a November 4, 2013 press conference concerning SAC Capital’s plea deal in connection with an insider trading investigation.
In 2006, with new information about rife and unbridled insider trading at hedge funds, the FBI went to work. After examining trading anomalies, poring over documents, conducting surveillances, and making the first approach to a key target, that individual began cooperating with the government.
What started with a key cooperator led to thousands of hours of relentless investigative work by a team of FBI agents uncovering an extensive network trafficking in inside information throughout the hedge fund industry that has been chronicled by many of you. The result, in part, brought today’s plea and is the latest step in the largest insider trading investigation in history.
None of this would have been possible without dedicated prosecutors willing to bring charges here in the Southern District led by U.S. Attorney Preet Bharara and Deputy U.S. Attorney Richard Zabel. I would like to recognize Assistant U.S. Attorneys Arlo Devlin-Brown, Antonia Apps, John Zach, and their chiefs, Marc Berger and Anjan Sahni.
I would also like to recognize the team from my office: FBI Special Agents Matthew Callahan, James Hinkle, Matthew Thoresen, B.J. Kang, and David Makol.
I also want to emphasize that today’s announcement has no effect on any individual awaiting trial. Those defendants are presumed innocent until proven otherwise.
What SAC Capital’s plea demonstrates is that cheating and breaking the law were not only permitted but allowed to persist.
SAC focused on hiring the best talent, talent who was equipped with extensive networks to circumvent traditional lines of communication. Talent who would be prepared to get confidential information to fuel their ilict trades.
SAC didn’t just break the law, their illegal activity resulted in “insider trading that was substantial, pervasive, and on a scale without known precedent” according the July indictment. It was nothing short of institutional failure.
In today’s agreement, SAC Capital will plead guilty to all five counts in the indictment. The result is $1.8 billion in fines and forfeiture, the largest penalty in an insider trading case ever. Most importantly, SAC Capital will terminate operations as an investment advisor and will be required to have real, genuine compliance overseen by an independent expert. In layman’s terms, SAC will no longer be able to invest anyone’s money but their own.
As today’s plea illustrates, SAC institutionalized their practices by cultivating a culture of corporate corruption. To those on the street who venerate Michael Douglas’ character Gordan Ghekko understand this: principles are just as important as your profit. The problem of insider trading is real and for companies that willfully turn a blind eye—be on notice—how your employees make money is just as important as how much they make.
Today is not the end. The FBI’s investigation into insider trading on Wall Street, on Main Street, in hedge funds, at expert networking firms, and anywhere else continues. We will relentlessly pursue this anticompetitive criminal behavior until every portfolio manager, every trading desk, and every hedge fund owner stops trading on insider information.
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