A deal has been reached to settle the landmark insider-trading case against SAC Capital Advisors, people familiar with the matter said.
Steven A. Cohen’s embattled hedge fund will plead guilty in federal court and pay more than $1 billion to settle charges stemming from an expansive insider trading investigation that lasted more than five years, sources familiar with the matter said on Monday.
U.S. prosecutors in July charged the hedge fund, which managed as much as $14 billion this year before investors began withdrawing money, with presiding over a culture in which employees flouted the law and were encouraged to tap their personal networks for inside information about publicly traded companies.
Prosecutors said in an announcement on Monday that the two sides had reached a settlement agreement which, if approved by a judge, would also resolve a civil forfeiture action against SAC and its affiliates.
U.S. Attorney Preet Bharara will appear alongside April Brooks, who is in charge of the Federal Bureau of Investigation’s criminal division in New York, at a press conference at 1 p.m. ET to discuss the deal, the sources said.
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Those charges include at least one count of securities fraud, but the settlement will not include an admission of promoting insider trading within the firm, people familiar with the matter said.
In addition to the plea, which will at least temporarily halt SAC’s run as a hedge fund managing public money, the company will be fined $1.8 billion—about $600 million of which has already been paid as part of a prior case’s resolution, added this person. The figure would appear to be a record amount for the Manhattan U.S. Attorney, and a large amount for the Justice Department overall.
A spokesman for SAC declined comment on the matter and spokesmen for the Southern District of New York U.S. Attorney’s Office, which is handling the case, didn’t respond to a request for comment.
SAC will not immediately settle separate civil charges, levied this past summer by the Securities and Exchange Commission, that company founder Steve Cohen failed to supervise employees who engaged in insider trading, said one of the people familiar with the matter.
(Read more: SAC retrenches as insider trading probe drains firm)
Nonetheless, as part of the deal, SAC will lose the right to manage public money, by surrendering its investment-advisor registration with the SEC, this person said.
The details of how that conversion will work are still being determined. After a brief grace period in which it will redeem the rest of the public money it currently manages, SAC will convert to a family office that manages at least $9 billion, said the person familiar with the matter.
Staff layoffs in addition to the ones it has already made in the U.S. and London are possible, this person said.
—Follow Kate Kelly on Twitter @KateKellyCNBC. Reuters contributed to this report.