At SAC, Culture Trumps Compliance By 38:1

At SAC, Culture Trumps Compliance By 38:1

Donna Boehme – Corporate Counsel – July 29, 2013

SAC chart

In 2012, the general counsel for embattled hedge fund giant SAC Capital was described by one newspaper as “shark repellent” against the U.S. prosecutors circling the firm on suspicions that its “expert networks” had been used for unbridled insider trading. Notably, the GC was also responsible for ramping up the fund’s compliance program in the shadow of ongoing government investigations. But after last week’s 41­page criminal indictment of the firm, with at least six former SAC employees already admitting to insider trading, a few things are clear:

  1. At least one big shark, relentless mother­of­all­prosecutors Preet Bharara, has not been deterred.
  2. Headcount and press statements do not a real compliance program make.
  3. At least for SAC, culture trumps compliance by 38:1.

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