SAC Capital Advisors’ Steven Cohen is hunkering down as a deadline approaches for the federal government to file criminal or civil insider-trading cases against the billionaire hedge-fund manager.

A five-year statute of limitations will expire at the end of July for the U.S. attorney in Manhattan to charge Cohen with illegally selling two stocks based on tips received by Mathew Martoma, a former fund manager at his firm. The Securities and Exchange Commission, which won a record $602 million settlement with SAC Capital over the trades in March, also must move by July to sue Cohen.

The firm, based in Stamford, Conn., signaled a new phase in its defense of insider claims when it told clients in a letter Friday that it was no longer cooperating unconditionally with the government. SAC Capital, which manages $15 billion, said it expects “substantially more clarity” in the coming months, according to the letter, portions of which were provided to Bloomberg News.

“When they say they are no longer fully cooperating, they may end up in front of a judge arguing over the subpoena or the breadth of it,” said Erik Gordon, a business and law professor at the University of Michigan at Ann Arbor.

After the settlement in the Martoma case, the SEC said it was not precluded from pursuing additional claims against SAC or Cohen. Since the government’s five-year crackdown on market corruption began, at least nine current or former SAC employees have been tied to allegations of illegal trading. Four have pleaded guilty.

The Martoma case, which centered on trades in drug makers Elan and Wyeth, was the first to link Cohen, 56, directly to alleged inside information. Cohen hasn’t been accused of any wrongdoing.

Jonathan Gasthalter, a spokesman for SAC Capital at Sard Verbinnen & Co., declined to comment on the letter. Ellen Davis, a spokeswoman for U.S. Attorney Preet Bharara in Manhattan, and John Nester, an SEC spokesman in Washington, also declined to comment on SAC’s disclosure.

Steve Marcus


Hedge fund manager Steven A. Cohen, founder and chairman of SAC Capital Advisors, responds to a question during a one-on-one interview session at the SkyBridge Alternatives (SALT) Conference in Las Vegas, Nevada May 11, 2011.