Steven A. Cohen, founder and owner of hedge fund advisers that used his own initials, S.A.C., settled an administrative complaint brought in 2013 by the Securities and Exchange Commission, that he failed to supervise former portfolio managers Mathew Martoma, who in 2014 was convicted of insider trading and sentenced to nine years imprisonment, and Michael Steinberg. Mr. Cohen resolved the SEC’s charges by agreeing not to be associated with any broker, dealer or investment adviser in a supervisory capacity until December 31, 2017. He also agreed to various undertakings, including permitting the SEC to examine his family office firms, and retaining an independent consultant for his family office firms to assess their compliance with securities laws. The SEC imposed no fine as part of the settlement. In 2013, however, SAC companies resolved federal criminal charges of insider trading by pleading guilty and paying a fine of US $1.8 billion (click here for details of this action and resolution); Mr. Cohen has not personally been subject to criminal charges. According to the SEC, during the first half of 2008, Mr. Martoma established a large position in two biotechnology-related stocks. Accounts for which Mr. Cohen had exclusive or shared trading authority also held positions in the same two stocks, claimed the SEC. Subsequently, charged the SEC, Mr. Martoma allegedly received material nonpublic insider information that indicated that the results of clinical tests of a widely anticipated drug jointly developed by these two companies were not as successful as had been predicted. After purportedly having a short conversation with Mr. Martoma, Mr. Cohen “oversaw the liquidation of his and Martoma’s positions” in the two stocks and established short positions instead, said the SEC. The SEC claimed the trades earned Mr. Cohen’s firms approximately US $275 million “in illicit profits and avoided losses.” The SEC said “Mr. Cohen ignored red flags indicating that Martoma might have access to material nonpublic information about the clinical trial.” In agreeing to the settlement, Mr. Cohen did not admit or deny any of the SEC’s findings. Mr. Martoma has appealed his conviction, which is currently pending.