Great Neck native Steven Cohen on Thursday paid a $900 million fine to the federal government as part of his now defunct hedge fund SAC Capital’s plea deal with the Securities and Exchange Commission for not properly overseeing his employees.
Thursday was the last day Cohen was able to pay the fine, after Judge Laura Taylor Swain had granted his company 90 days to pay the record penalty to the federal government.
The payment was made in four installments, according to a report in the New York Times.
The extension allowed Cohen’s Connecticut-based company, now renamed Point 72 Asset Management, to continue to trade in the stock market until the deadline ended on Thursday.
The plea deal, accepted by Swain on April 10, also forces Cohen’s company to shut its doors to outside investors.
Cohen, 57 and an alumnus of Great Neck North High School, has not been accused of any criminal wrongdoing, but had been named in a Securities and Exchange Commissions lawsuit accusing him of not properly supervising his employees.
The SEC alleges that Cohen failed to prevent employees that he directly supervised from making illegal trades, despite having prior knowledge of their intentions to do so. Cohen allegedly made more than $200 million in profits through insider trading.
Eight of Cohen’s employees have been convicted of insider trading, including the most recent conviction of Matthew Martoma in February. Federal prosecutors in that case linked Cohen to Martoma’s inquiries into experimental Alzheimer’s medication.
The two reportedly had a 20-minute phone call a day before the hedge fund sold two drug stocks, which prosecutors said helped SAC generate profits of $275 million in July 2008.
Martoma repeatedly refused to tell FBI agents what he and Cohen discussed during the phone call.
In December, Michael Steinberg, also an alumnus of Great Neck North High School, was convicted on four counts of securities fraud and one count of conspiracy.
“Like many other traders before him who, blinded by profits, lost their sense of right and wrong, Steinberg now stands convicted of federal crimes and faces the prospect of losing his liberty,” said U.S. Attorney Preet Bharara in a statement following Steinberg’s conviction.
Steinberg in May was sentenced to 42 months in prison and was also ordered by U.S. District Judge Richard J. Sullivan to forfeit $365,142.30 to the federal government, pay a $2 million fine for using confidential stock information to make a profit for his company and to serve three years of supervised release.
“Michael Steinberg traded on information from company insiders at Dell and NVIDIA to reap nearly $2 million in illegal profits. Today he has learned the steep cost of those transactions,” Bharara said in a statement following Steinber’s sentencing.
Steinberg worked as a portfolio manager for Cohen and was convicted of receiving confidential information about Dell and NVIDIA stocks, which he then used to generate $1.4 million in profits.
Steinberg and Cohen are avid art collectors, who frequently visited several art galleries and stores in Great Neck, according to published reports.
Cohen and Steinberg are also major philanthropists.
Steinberg helped to found Natan, which, according to its website, “supports entrepreneurial organizations that demonstrate an innovative approach to addressing the challenges facing Jews around the world” by giving out grants.
The Steven and Alexandra Cohen Children’s Medical Center of New York in New Hyde Park, which is part of the North Shore-LIJ Health System, and a center at Mt. Sinai Hospital in New York City are named after Cohen and his wife.
Even after paying the $1.2 billion penalty, Cohen is expected to have a personal fortune of about $9 billion, which will be managed by Point72.
