By Chad Bray
A federal judge said he needs more time to consider a $602 million settlement by hedge-fund firm SAC Capital Advisors LP to resolve allegations related to what federal authorities have called the most lucrative insider-trading scheme ever.
The civil settlement with the Securities and Exchange Commission is one of two such agreements reached earlier this month by SAC, one of the nation’s most successful investment firms, which became ensnared in a historic crackdown by the U.S. on insider-trading. SAC agreed to pay $616 million in total to settle those civil lawsuits, without admitting or denying wrongdoing.
U.S. District Judge Victor Marrero said on Thursday while he had no reason to question the “legitimacy” of the settlement amount, he was concerned about the potential impact of a pending appeals-court case over the SEC’s decades-old policy of allowing defendants to settle allegations of wrongdoing without admitting or denying wrongdoing.
Judge Marrero suggested he might condition his approval of the SAC settlement on the outcome of that appellate decision, which is expected in the coming months. The appellate case involves a separate SEC pact with Citigroup and is pending before the U.S. Second Circuit Court of Appeals.
“The ground is shaking. There are some tremors,” Judge Marrero said after a SEC lawyer suggested the case law over the securities regulator’s policy had long been resolved.
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