On July 25th, the office of the Manhattan U.S. Attorney announced the indictment of SAC Capital Advisors, L.P., and its affiliated companies. The unsealed indictment alleges the defendants engaged in insider trading "made possible by institutional practices that encouraged the widespread solicitation and use of illegal inside information. Unlawful conduct by individual employees and an institutional indifference to that unlawful conduct resulted in insider trading that was substantial, pervasive and on a scale without known precedent in the hedge fund industry." Indictment. A civil forfeiture action was also filed. Civil Forfeiture. And related civil and criminal charges were filed against Richard Lee, a SAC Capital portfolio manager. SEC Press Release; Sealed Information. Reuters reported that a conviction is likely given that four former SAC Capital employees have already pleaded guilty. Respondeat Superior. On July 19th, the SEC instituted contested administrative proceedings against Steven A. Cohen, founder and owner of SAC Capital. The SEC alleges Cohen failed to adequately supervise two SAC Capital portfolio managers, Mathew Martoma and Michael Steinberg, who were allowed to engage in insider trading despite the presence of warning signs which should have caused Cohen to scrutinize Martoma's and Steinberg's activities. In the Matter of Steven A. Cohen, SEC Release No. IA-3634; SEC Press Release. On July 23rd, Reuters summarized the contents of a 46-page letter Cohen's lawyers distributed to certain SAC Capital employees which outlines Cohen's response to the SEC action. Among other things, the letter notes that Cohen was at his vacation home when some of the allegedly improper trades were conducted and had probably ignored emails concerning the trading. The letter also contends that Cohen's sale of shares from his personal account was not done on the basis of insider trading but simply because a top SAC Capital portfolio manager happened to be selling shares of that company. Willful Ignorance.