NEW YORK -- The hedge fund SAC Capital Advisors told investors it has received a notice of potential action by the U.S. Securities and Exchange Commission, according to a source familiar with the matter.
Looming civil action by the regulator would take direct aim at the $14-billion hedge fund after federal prosecutors accused one of its former portfolio managers -- Mathew Martoma, who worked at an SAC unit called CR Intrinsic Investors -- of taking part in history's most lucrative insider-trading scheme.
Prosecutors claim the scheme generated $276 million in profits and avoided losses for Martoma's fund. The illicit tips involved an Alzheimer's drug under development by two publicly traded drug companies.
Martoma was the latest former SAC employee to face insider-trading charges in the federal government's crackdown on Wall Street corruption.
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The SEC's so-called Wells notice is a procedural step by which the agency informs targets of investigations it may take action.