Photo: New York magazine
The SEC has been probing SAC Capital over trades one of its units made in Cougar ahead of the company’s takeover by Johnson & Johnson for over a year, according to a report in the Wall Street Journal.
The WSJ said the SEC is probing whether a unit of SAC Capital Advisors, CR Intrinsic, improperly profited $2.5 million after its 632,291 shares in Cougar soared 16% in value after the $1 billion takeover was announced on May 21 2009, according to the report.
It also said that the SEC probe seeks to determine whether CR Intrinsic learned about the takeover ahead of time from an expert network.
UPDATE: However SAC Capital Advisors LP told Bloomberg that its investment in Cougar Biotechnology was “perfectly reasonable” and based on publicly available information. And the company’s spokesman said, “We have not been contacted by any regulatory authority related to this matter, but we would of course cooperate should there be an inquiry.”
The WSJ had said SAC is cooperating with the probe.
Earlier: The relevant expert network mentioned by the WSJ is Leerink Swann LLC, a Boston investment bank that also runs an expert-network, MedaCorp. Leerink acted as a financial adviser to Cougar, which suggests that its investment bank unit (presumably kept separate from its expert network unit) would have known about the takeover plans. Meanwhile in Leerink’s expert network unit, one of MedaCorp’s biggest clients was SAC Capital.
The WSJ made it clear that SAC has not been charged with wrongdoing, which suggests that the SEC has not implicated SAC. However this is the third SEC inquiry into SAC Capital — and the WSJ says this investigation “raises the stake” for SAC.