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Billionaire Steven Cohen is fighting back. He faces federal charges that he didn't do enough to prevent insider trading at his hedge fund SAC Capital. As The Wall Street Journal reported this morning, Cohen's firm issued a rebuttal, claiming that he never saw an email that's an important part of the government's case.
Here's NPR's Jim Zarroli.
JIM ZARROLI, BYLINE: On Friday, the Securities and Exchange Commission finally brought charges against 57-year-old Steven Cohen. He wasn't accused of insider trading but the government did file civil charges against him. It said Cohen allowed insider trading to happen at his firm by failing to adequately supervise his employees. And perhaps most alarmingly for Cohen, the government wants to get him barred for life from handling other people's money. Today, The Wall Street Journal said Cohen's lawyers have compiled a point by point rebuttal of the government's case.
Jacob Frenkel is a securities lawyer who has been following the case.
JACOB FRENKEL: It's a communication directed at the employees of SAC to give them comfort that Steve Cohen intends to fight the allegations and why they are baseless.
ZARROLI: According to The Journal, the paper addresses an email about Dell computers that was sent to Cohen by one of his employees in August 2008. The government says Cohen should have known, based on the contents of the email, that it contained illegally obtained information. In the white paper to employees, Cohen's lawyers said he receives a thousand emails and instant messages a day, and there's no evidence he ever read the one in question.
Columbia Law School professor John Coffee is skeptical about Cohen's argument.
JOHN COFFEE: He's famous for wanting all the information he can get about an issuer. So it doesn't seem totally credible that he would ignore late breaking emails from the people who were at the point collecting all the available information.
ZARROLI: The white paper also addresses another transaction highlighted by the government. The SEC says Cohen's firm traded shares of two drug companies based on inside information about the results of a drug trial. But Cohen's lawyers say the shares were traded because they had risen so much in value over the preceding months and it was time for a little profit taking.
The white paper is likely to form a kind of rough outline of what Cohen's defense will be once the case is heard by a judge.
Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.