Former SAC Capital Portfolio Manager Avoids Prison Time

Feb 6 2015 | 2:41am ET

A federal judge said Thursday that former SAC Capital Advisors portfolio manager Noah Freeman is a free man after he helped the government produce evidence against other insider-trading suspects. Prosecutors hope that such leniency will encourage cooperation in future white-collar cases.

"The very nature of insider trading makes it virtually impossible to prosecute without the help of cooperators," Judge Jed Radkoff said. “What ultimately tips the balance toward no jail time is the very substantive, if not extraordinary aid he has given.”

Prosecutors said that Freeman obtained insider information and used it for trading while employed at Sonar Capital Management and SAC Capital. 

At one point, Freeman managed a $300 million portfolio, and once said, according to an FBI memo, that it was “understood” that providing one’s best trading ideas to SAC Capital founder Steven Cohen meant “providing Cohen with inside information.”

After his arrest, Freeman provided information on at least a dozen individuals suspected of insider trading. In addition, he helped prosecutors win a guilty plea and $1.8 billion in financial penalties from SAC Capital. The hedge fund’s financial settlement was the largest of its type in history. 

In addition, the fund can no longer manage outside money.

Freeman could have received up to 57 months in prison. Instead, he will forfeit $181,000. In 2011, the judge ordered Freeman to pay more than $833,000 to settle insider-trading allegations with the Securities Exchange Commission.

During his cooperation with authorities, Freeman testified against former Primary Global Research consultant Winifred Jiau, who received a four-year sentence.

Freeman also provided evidence against former SAC Capital portfolio manager and the best man at his wedding, Donald Longueuil. Freeman wore listening devices for the FBI and recorded Longueuil admitting on tape that he too traded on insider tips.

In 2011, Longueuil pled guilty to charges and received a 2-1/2 year prison sentence. He has since been released.  

Meanwhile, Steve Cohen’s former hedge fund changed its name to Point72 Asset Management and converted to a family office that manages his personal $10.3 billion fortune and those of eligible employees. 

The SEC has filed a suit against Cohen, accusing him of failing to properly supervise his employees, but it has faced multiple delays.

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