While the government apparently cannot prove that Mr. Cohen had knowledge of the trading, since only an administrative proceeding has been filed against him, the case seeks to attribute certain criminal acts of employees to the company itself, claiming that the fund “enabled and promoted” the illicit behavior.Corporations are "legal persons," capable of suing and being sued, and capable of committing crimes. Under the doctrine of respondeat superior, a corporation may be held criminally liable for the illegal acts of its directors, officers, employees, and agents. To be held liable for these actions, the government must establish that the corporate agent's ations (i) were within the scope of his duties and (ii) were intended,at least in part, to benefit the corporation.
But why bother? There is no jail in which to place a corporation, what is gained, other than headlines? There are a couple of reasons, but principally one - to put the entity out of business. While it is theoretically possible to hold corporate officers liable for the crimes committed by the entity, in reality that is extremely difficult. The goal here is undoubtedly to shut down SAC Capital, not to put it in jail.
The indictment will undoubtedly cause problems for the firm. Many investors do not like publicity, and in partular did not want to be associated with an entity that has been indicted. So, the firm loses investors, and thus capital. In addition, the indictment may trigger termination clauses in the firm's investment and financial agreements triggering termination of important financiing agreements.
There is also the financial penalties available in a criminal case. in the indictment, the government is seeking forfeiture of "all property, real and personal, which constitutes or is derived from proceeds traceable to the commission of those offenses" which are set forth in the indictment under Title 18, United States Code, Section 981(a) (1) (C), and Title 28, United States Code, Section 2461. Given the fact that the indictment alleges hundreds of millions of dollars in profits, the forfeiture provisions post a significant threat to SAC Capital's continued existence.
SAC Capital Is Indicted
