Manager of defunct hedge fund pleads guilty to fraud

By Terry Baynes

(Reuters) - A former hedge fund manager pleaded guilty on Friday to defrauding investors in a $12.6 million scheme, more than five years after the fund collapsed under the weight of failed real estate loans.

Lloyd Barriger, who operated Gaffken & Barriger, a Monticello, New York-based investment fund, pleaded guilty in White Plains federal court to charges of securities fraud, mail fraud and conspiracy, the U.S. Attorney's Office said in a statement.

Federal prosecutors accused Barriger of bilking more than 70 investors from July 2006 to March 2008 by soliciting millions of dollars for a fund he falsely presented as a safe and liquid investment. He continued to promise investors an 8 percent return, even as the fund defaulted on a $20 million line of credit and held an increasingly delinquent portfolio, according to an indictment filed in February.

"Once again, belief in hedge funds by hopeful investors proved to be sadly misplaced," Manhattan U.S. Attorney Preet Bharara said in a statement. "In this case, the perpetrator was not in a sleek Manhattan building but rather in Sullivan County."

Barriger's lawyer, federal defender Mark Gombiner, did not immediately respond to an email seeking comment.

Barriger, 57, of Damascus, Pennsylvania, faces a maximum sentence of 65 years in prison. U.S. District Judge Cathy Seibel, who is overseeing the case, scheduled a sentencing hearing for November 15.

In addition to a prison term, federal prosecutors will seek at least $12.6 million in forfeited assets, representing the proceeds of the charged crimes, the indictment said.

The case is USA v. Barriger, U.S. District Court for the Southern District of New York, No. 11-416.

(Reporting By Terry Baynes in New York; Editing by Bill Trott)

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Hedge fund pleads not guilty to US fraud charges

NEW YORK (AP) — Prosecutors said a large volume of evidence including electronic messages, court-ordered wiretaps and consensual recordings is stacked against a Connecticut-based hedge fund that pleaded not guilty Friday to criminal charges accusing it of letting insider trading flourish for more than a decade.

Assistant U.S. Attorney Antonia Apps told a federal judge in Manhattan that investigators had "voluminous" evidence against SAC Capital Advisors, a Stamford, Conn.-based firm owned by billionaire Steven A. Cohen.

She said the evidence included "electronic messages, instant messages, court-ordered wiretaps and consensual recordings."

The plea was entered by Peter Nussbaum, SAC's longtime general counsel, and came a day after the company was charged with wire and securities fraud, accused of making hundreds of millions of dollars illegally. Federal prosecutors described a culture at SAC that permitted, if not encouraged, insider trading.

Prosecutors said the victims were large companies whose inside information was stolen and traded upon. The next hearing was set for Sept. 24.

Outside court, lawyers for the company including Nussbaum declined to comment and paced on a sidewalk looking for cars to pick them up as the media followed.

SAC said in a statement after the charges were announced Thursday that it will continue normal operations. It said it "has never encouraged, promoted or tolerated insider trading and takes its compliance and management obligations seriously." The company declined through a spokesman to comment Friday.

Cohen has not been charged and was not in court Friday. He is referenced in court papers only as the "SAC owner" who "enabled and promoted" insider trading practices.

At a news conference Thursday, U.S. Attorney Preet Bharara said SAC "trafficked in inside information on a scale without any known precedent in the history of hedge funds."

"When so many people from a single hedge fund have engaged in insider trading, it is not a coincidence," the prosecutor said. "It is, instead, the predictable product of substantial and pervasive institutional failure."

He declined to comment on whether Cohen would be charged, saying: "I'm not going to say what tomorrow may or may not bring."

From 1999 to 2010, the company earned hundreds of millions of dollars illegally as its portfolio managers and analysts traded on inside information from at least 20 public companies, Bharara said.

The possibility that the criminal case could topple the firm, which once managed $15 billion in assets, led the prosecutor to note that the government was not seeking to freeze SAC's assets. Bharara added that prosecutors were "mindful to minimize risk to third-party investors."

Still, the government in one lawsuit sought SAC's forfeiture of "any and all" assets.

The charges came less than a week after federal regulators accused Cohen in a related civil case of failing to prevent insider trading at the firm. While the Justice Department's action targets SAC but not Cohen directly, the civil case brought by the Securities and Exchange Commission seeks to effectively shut him down by barring him from managing investor funds.

___

Associated Press writers Christina Rexrode in New York and Marcy Gordon in Washington contributed to this report.

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Hedge fund to operate as it faces US fraud charges

NEW YORK (AP) — A giant hedge fund led by an embattled billionaire pledged to continue normal operations after an indictment accusing it of permitting an environment where extensive insider trading could reap hundreds of millions of dollars in illegal profits for more than a decade was unsealed in Manhattan federal court.

SAC Capital Advisors said in a statement Thursday that federal prosecutors had advised the Stamford, Conn.-based company that charges of wire fraud and securities fraud unveiled earlier in the day were not meant to affect the operations of its business.

"SAC will continue to operate as we work through these matters," the company said. It added that it expected to agree with the government on a protective order that would "permit SAC to continue its operations in the ordinary course."

Lawyers for the company were expected to appear in federal court Friday as the company faces the charges.

The criminal indictment and civil lawsuits brought against SAC Capital Advisors and related companies did not name billionaire Steven A. Cohen as a defendant, referencing him only as the "SAC owner" who "enabled and promoted" insider trading practices.

At a news conference, U.S. Attorney Preet Bharara said SAC "trafficked in inside information on a scale without any known precedent in the history of hedge funds."

"When so many people from a single hedge fund have engaged in insider trading, it is not a coincidence," the prosecutor said. "It is, instead, the predictable product of substantial and pervasive institutional failure."

He declined to comment on whether Cohen would be charged, saying: "I'm not going to say what tomorrow may or may not bring."

From 1999 to 2010, the company earned hundreds of millions of dollars illegally as its portfolio managers and analysts traded on inside information from at least 20 public companies, Bharara said.

The possibility that the criminal case could topple the Stamford, Conn., firm, which once managed $15 billion in assets, led the prosecutor to note that the government was not seeking to freeze SAC's assets. Bharara added that prosecutors were "mindful to minimize risk to third-party investors."

Still, the government in one lawsuit sought SAC's forfeiture of "any and all" assets.

The charges came less than a week after federal regulators accused Cohen in a related civil case of failing to prevent insider trading at the firm. While the Justice Department's action targets SAC but not Cohen directly, the civil case brought by the Securities and Exchange Commission seeks to effectively shut him down by barring him from managing investor funds.

In its statement, SAC Capital said Thursday it "has never encouraged, promoted or tolerated insider trading and takes its compliance and management obligations seriously."

It added: "The handful of men who admit they broke the law does not reflect the honesty, integrity and character of the thousands of men and women who have worked at SAC over the past 21 years."

A lawyer for Cohen did not immediately respond to a message for comment. Last week, an SAC Capital spokesman said "Steve Cohen acted appropriately at all times."

_____

Associated Press writers Christina Rexrode in New York and Marcy Gordon in Washington contributed to this report.

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Insider-Trading Charges For Huge Hedge Fund

A huge hedge fund owned by an embattled billionaire is facing charges of insider-trading over an 11-year period.

US federal authorities in New York City confirmed the launching of criminal charges against Connecticut-based SAC Capital Advisors (SAC).

SAC has been charged with wire fraud and four counts of securities fraud.

It is understood four individuals have been charged over the allegations but owner Steven Cohen is not one of them.

The criminal charges come the week after Mr Cohen was accused of wrongdoing in a civil case brought by the Securities and Exchange Commission (SEC).

The SEC alleged that he failed to stop insider trading at his firm.

It has been alleged that the trades centred on more than 20 companies.

Founder Steven Cohen has denied wrongdoing by his firm

SAC is believed to have had up to $15bn (£9.8bn) in assets.

Prosecutors are seeking forfeiture of what they said were illegal profits made from the insider trading, according to court documents.

The lawsuit was filed in federal court in New York on the same day as criminal charges were unveiled against the firm founded by Mr Cohen.

They have accused SAC of making "hundreds of millions of dollars in illegal profits".

It has also called for SAC to pay penalties for money laundering.

A spokesman for SAC Capital did not immediately respond to a request for comment.

An SAC portfolio manager pleaded not guilty last year to charges he earned $9m (£5.9bn) in bonuses after persuading a medical professor to leak secret data from an Alzheimer's disease trial.

An SAC Capital spokesman said last week that Mr Cohen has "acted appropriately at all times".

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Insider-Trading Charges For Huge Hedge Fund

A huge hedge fund owned by an embattled billionaire is facing charges of insider-trading over an 11-year period.

US federal authorities in New York City confirmed the launching of criminal charges against Connecticut-based SAC Capital Advisors (SAC).

SAC has been charged with wire fraud and four counts of securities fraud.

It is understood four individuals have been charged over the allegations but owner Steven Cohen is not one of them.

The criminal charges come the week after Mr Cohen was accused of wrongdoing in a civil case brought by the Securities and Exchange Commission (SEC).

The SEC alleged that he failed to stop insider trading at his firm.

It has been alleged that the trades centred on more than 20 companies.

Founder Steven Cohen has denied wrongdoing by his firm

SAC is believed to have had up to $15bn (£9.8bn) in assets.

Prosecutors are seeking forfeiture of what they said were illegal profits made from the insider trading, according to court documents.

The lawsuit was filed in federal court in New York on the same day as criminal charges were unveiled against the firm founded by Mr Cohen.

They have accused SAC of making "hundreds of millions of dollars in illegal profits".

It has also called for SAC to pay penalties for money laundering.

A spokesman for SAC Capital did not immediately respond to a request for comment.

An SAC portfolio manager pleaded not guilty last year to charges he earned $9m (£5.9bn) in bonuses after persuading a medical professor to leak secret data from an Alzheimer's disease trial.

An SAC Capital spokesman said last week that Mr Cohen has "acted appropriately at all times".

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Insider-Trading Charges For Huge Hedge Fund

A huge hedge fund owned by an embattled billionaire is facing charges of insider-trading over an 11-year period.

US federal authorities in New York City confirmed the launching of criminal charges against Connecticut-based SAC Capital Advisors (SAC).

SAC has been charged with wire fraud and four counts of securities fraud.

It is understood four individuals have been charged over the allegations but owner Steven Cohen is not one of them.

The criminal charges come the week after Mr Cohen was accused of wrongdoing in a civil case brought by the Securities and Exchange Commission (SEC).

The SEC alleged that he failed to stop insider trading at his firm.

It has been alleged that the trades centred on more than 20 companies.

Founder Steven Cohen has denied wrongdoing by his firm

SAC is believed to have had up to $15bn (£9.8bn) in assets.

Prosecutors are seeking forfeiture of what they said were illegal profits made from the insider trading, according to court documents.

The lawsuit was filed in federal court in New York on the same day as criminal charges were unveiled against the firm founded by Mr Cohen.

They have accused SAC of making "hundreds of millions of dollars in illegal profits".

It has also called for SAC to pay penalties for money laundering.

A spokesman for SAC Capital did not immediately respond to a request for comment.

An SAC portfolio manager pleaded not guilty last year to charges he earned $9m (£5.9bn) in bonuses after persuading a medical professor to leak secret data from an Alzheimer's disease trial.

An SAC Capital spokesman said last week that Mr Cohen has "acted appropriately at all times".

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This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Insider-Trading Charges For Huge Hedge Fund

A huge hedge fund owned by an embattled billionaire is facing charges of insider-trading over an 11-year period.

US federal authorities in New York City confirmed the launching of criminal charges against Connecticut-based SAC Capital Advisors (SAC).

SAC has been charged with wire fraud and four counts of securities fraud.

It is understood four individuals have been charged over the allegations but owner Steven Cohen is not one of them.

The criminal charges come the week after Mr Cohen was accused of wrongdoing in a civil case brought by the Securities and Exchange Commission (SEC).

The SEC alleged that he failed to stop insider trading at his firm.

It has been alleged that the trades centred on more than 20 companies.

Founder Steven Cohen has denied wrongdoing by his firm

SAC is believed to have had up to $15bn (£9.8bn) in assets.

Prosecutors are seeking forfeiture of what they said were illegal profits made from the insider trading, according to court documents.

The lawsuit was filed in federal court in New York on the same day as criminal charges were unveiled against the firm founded by Mr Cohen.

They have accused SAC of making "hundreds of millions of dollars in illegal profits".

It has also called for SAC to pay penalties for money laundering.

A spokesman for SAC Capital did not immediately respond to a request for comment.

An SAC portfolio manager pleaded not guilty last year to charges he earned $9m (£5.9bn) in bonuses after persuading a medical professor to leak secret data from an Alzheimer's disease trial.

An SAC Capital spokesman said last week that Mr Cohen has "acted appropriately at all times".

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