United States v. S.A.C. CAPITAL ADVISORS, L.P.; S.A.C. CAPITAL ADVISORS LLC; CR INTRINSIC INVESTORS, LLC; and SIGMA CAPITAL MANAGEMENT, LLC, Southern District of New York (Nov. 4, 2013) — Indictment

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
UNITED STATES OF AMERICA 
-v. -
S.A.C. CAPITAL ADVISORS, L.P., 
S.A.C. CAPITAL ADVISORS LLC, 
CR INTRINSIC INVESTORS, LLC, and 
SIGMA CAPITAL MANAGEMENT, LLC, 
Defendants. 
X 
-    -    -    -    -    ------------X 
COUNT ONE 
(Wire Fraud) 
The Grand Jury charges: 
SEALED 
INDICTMENT 
1. As described below, this Indictment charges the 
corporate entities responsible for the management of a major 
hedge fund with criminal responsibility for insider trading 
offenses committed by numerous employees and made possible by 
institutional practices that encouraged the widespread 
solicitation and use of illegal inside information. Unlawful 
conduct by individual employees and an institutional 
indifference to that unlawful conduct resulted in insider 
trading that was substantial, pervasive and on a scale without 
known precedent in the hedge fund industry. 
The SAC Capital Entities 
2. At all times relevant to this Indictment, an 
1 
individual residing in Greenwich, Connecticut (the "SAC Owner") 

operated a group of affiliated hedge funds (collectively, the 
"SAC Hedge Fund" or "SAC"). The SAC Hedge Fund, founded by the 
SAC Owner in or around 1992, included, at its peak, over $15 
billion of assets under management. The majority of the capital 
managed by the SAC Hedge Fund at all relevant times belonged to 
the SAC Owner himself, with the balance of capital provided by 
outside investors. 
3. The SAC Owner operated the SAC Hedge Fund through 
his ownership of several fund management companies, which served 
as investment advisors for the SAC Hedge Fund. These management 
companies generally charged outside investors in the SAC Hedge 
Fund annual fees of approximately three percent of assets under 
management and up to 50 percent of investment returns. The 
principal management companies were as follows: (i) CR INTRINSIC 
INVESTORS, LLC ("CR INTRINSIC"), a Delaware limited liability 
company; (ii) SIGMA CAPITAL MANAGEMENT, LLC ("SIGMA CAPITAL"), a 
Delaware limited liability company; (iii) S.A.C. CAPITAL 
ADVISORS, LLC ("SAC CAPITAL LLC"), a Delaware limited liability 
company that actively managed investments in the SAC Hedge Fund 
through approximately 2008; and (iv) S.A.C. CAPITAL ADVISORS, 
L.P. ("SAC CAPITAL LP") a Delaware limited partnership that 
actively managed investments in the SAC Hedge Fund beginning in 
2 

approximately 2009 (collectively, the "SAC ENTITY DEFENDANTS"). 
Overview of The Scheme 
4. At various times between in or about 1999 through 
at least in or about 2010, employees and agents of SAC CAPITAL 
LP, SAC CAPITAL LLC, CR INTRINSIC, and SIGMA CAPITAL, the 
defendants, obtained material, non-public information ("Inside 
Information") relating to publicly-traded companies and traded 
on that Inside Information in order to (i) increase the return 
on investment in the SAC Hedge Fund; and (ii) increase fees 
received by the SAC ENTITY DEFENDANTS. 
5. The SAC ENTITY DEFENDANTS committed the insider 
trading scheme through the acts of, among others, numerous 
portfolio managers ("SAC PMs") and research analysts ("SAC RAs") 
who engaged in a pattern of obtaining Inside Information from 
dozens of publicly-traded companies across multiple industry 
sectors. Employees of the SAC ENTITY DEFENDANTS traded on 
Inside Information themselves and, at times, recommended trades 
to the SAC Owner based on Inside Information. 
6. The SAC ENTITY DEFENDANTS enabled and promoted 
the Insider Trading scheme through several means detailed 
herein. First, the SAC ENTITY DEFENDANTS sought to hire SAC PMs 
and SAC RAs with proven access to public company contacts likely 
3 

to possess Inside Information. 
Secondr the SAC ENTITY 
DEFENDANTS/ 
employees were financially incentivized to recommend 
to the SAC Owner "high conviction~~ trading ideas in which the 
SAC PM had an "edger over other investors/ but repeatedly were 
not questioned when making trading recommendations that appeared 
to be based on Inside Information. Third
1 
on numerous occasions 
the SAC ENTITY DEFENDANTS failed to employ effective compliance 
procedures or practices to prevent SAC PMs and SAC RAs from 
engaging in insider trading. 
7. At bottom
1 
the encouragement by the SAC ENTITY 
DEFENDANTS of SAC PMs and SAC RAs to pursue aggressively an 
information "edge
11 
overwhelmed limited SAC compliance systems. 
Further
1 
the relentless pursuit of an information "edge
11 
fostered a business culture within SAC in which there was no 
meaningful commitment to ensure that such "edge
11 
came from 
legitimate research and not Inside Information. The predictable 
and foreseeable result
1 
as charged herein
1 
was systematic 
insider trading by the SAC ENTITY DEFENDANTS resulting in 
hundreds of millions of dollars of illegal profits and avoided 
losses at the expense of members of the investing public. 
4 

The Operation Of The SAC Hedge Fund 
8. The SAC Hedge Fund functioned as a collection of 
dozens of individual portfolios, each headed by a portfolio 
manager responsible for his or her portfolio's profit-and-loss 
results, and each charged with sharing the best trading ideas 
with the SAC Owner directly. 
9. In particular, the SAC Owner allocated investment 
capital between and among up to approximately 100 internal 
portfolios, each of which was generally managed by a SAC PM who 
specialized in a particular investment sector, such as 
technology, health care, financial services, industrial, 
consumer, or energy. Each portfolio manager, in turn, typically 
employed one or more research analysts to assist with the 
development of investment ideas for the SAC PM's portfolio. 
10. The SAC Hedge Fund portfolios were in many ways 
autonomous from each other. Each SAC PM had substantial 
discretion to make investment decisions in his or her portfolio, 
even if a position was contrary to a position taken by other SAC 
PMs operating a portfolio in the same sector. Each SAC PM was 
compensated principally based on the performance of his or her 
own portfolio, and without regard to the investment performance 
of other SAC PMs. Likewise, SAC RAs were compensated largely at 
5 

the discretion of the SAC PM to whom the SAC RA reported and 
based on the profitability of that PM's portfolio. 
11. The largest portfolio in existence at the SAC 
Hedge Fund was, at all relevant times, a portfolio managed by 
the SAC Owner himself. The SAC Owner had sole trading 
discretion over his portfolio and made these decisions 
principally based on trading recommendations from SAC PMs. In 
particular, at all relevant times the SAC Owner required each 
SAC PM to share "high conviction" investment ideas-i.e., the 
investment recommendations in which the SAC PM had the greatest 
confidence -with the SAC Owner. In fact, providing such ideas 
to the SAC Owner was an express part of a SAC PM's duties and 
was emphasized to SAC PMs in the hiring process and once working 
at SAC. 
12. In order to facilitate the collection of top 
trading ideas from the SAC PMs, the SAC ENTITY DEFENDANTS 
employed different systems at various times, including, for 
example, a template filled out on SAC's computer system and 
designated voicemail and e-mail boxes to collect trading ideas. 
In addition to these formal systems, the SAC Owner communicated 
with SAC PMs regularly through various means to ascertain their 
best trading ideas, including during semi-regular Sunday evening 
6 

calls and in-person conversations. To assist in processing SAC 
PM ideas, the SAC Owner at times employed sector-focused 
"research traders" who, among other things, ensured that the 
ideas of SAC PMs in the sector were brought to the SAC Owner's 
attention and monitored the trading of the SAC PMs to ensure 
that the trading was consistent with recommendations made to the 
SAC Owner. 
13. At all relevant times, the SAC ENTITY DEFENDANTS 
formally tracked trades made by the SAC Owner in the portfolio 
he personally managed in order to "tag" or credit the SAC PM 
responsible for the idea. At all relevant times, the SAC ENTITY 
DEFENDANTS paid SAC PMs an annual bonus -which could in some 
cases exceed all other components of compensation -based on a 
percentage of the net profits made by the SAC Owner on trades 
"tagged" to a particular SAC PM. 
SAC PMs and SAC RAs Who Obtained Or Traded On Inside Information 
While Employed By The SAC ENTITY DEFENDANTS 
14. Numerous SAC PMs and SAC RAs, not all of whom 
are identified herein, obtained or traded on Inside Information 
while employed by one or more of the SAC ENTITY DEFENDANTS. 
Each of the eight individual SAC PMs or SAC RAs identified by 
name below have been charged with and/or convicted of trading on 
Inside Information in connection with one or more of the SAC 
7 

ENTITY DEFENDANTS: 
a. Wes Wang ("Wang") was a SACRA specializing 
in the technology sector employed by SIGMA CAPITAL from 
approximately 2002 to 2005. While serving as a SACRA, Wang 
obtained Inside Information with respect to various technology 
companies, including but not limited to Taiwan Semiconductor 
Manufacturing Company Limited ("TSMC"), Cisco Systems, Inc. 
("Cisco"), Broadcom Corporation ("Broadcom"), eBay, Inc. 
( "eBay") , Cypress Semiconductor Corporation ("Cypress") , 
Polycom, Inc. ("Polycom"), QLogic Corporation ("QLogic") and 
Cirrus Logic Inc. ("Cirrus"). Wang provided trading ideas based 
on Inside Information to the portfolio manager to whom he 
reported ("Sigma PM-1"). On or about July 13, 2012, Wang pled 
guilty in federal court to two counts of conspiracy to commit 
securities fraud, one of which involved insider trading in 
connection with Wang's employment at SIGMA CAPITAL from 2002 to 
2005. At his guilty plea, Wang admitted that, while at SIGMA 
CAPITAL, he had obtained Inside Information and provided it to 
Sigma PM-1 to be used for the purchase and sale of securities. 
b. Richard Choo-Beng Lee ("CB Lee") was a SACRA 
specializing in the technology sector employed by SAC CAPITAL 
LLC 
from approximately 1999 to 2003 and by SIGMA CAPITAL from 
8 

approximately 2003 to 2004. While serving as a SACRA, CB Lee 
obtained Inside Information with respect to various technology 
companies, including but not limited to Intel Corporation 
("Intel") , Advance Micro Devices, Inc. ( "AMD") , and Al tera 
Corporation ("Altera"). CB Lee provided trading ideas based on 
Inside Information to the portfolio manager to whom he reported 
and the SAC Owner. On or about October 13, 2009, CB Lee pled 
guilty in federal court to, among other things, conspiracy to 
commit securities fraud and wire fraud relating to trading 
recommendations based on Inside Information that CB Lee had 
provided to Sigma PM-1 and others following CB Lee's departure 
from SIGMA CAPITAL. At his guilty plea, CB Lee admitted that he 
obtained Inside Information and that he purchased and sold 
securities based in part on such Inside Information. 
c. Jon Horvath was a SACRA specializing in the 
technology sector employed by SIGMA CAPITAL from approximately 
2006 through 2011. Horvath served as a research analyst for 
portfolio manager Michael Steinberg, who has been employed by 
SIGMA CAPITAL from approximately 2003 to the present, and as a 
portfolio manager for SAC CAPITAL LLC from approximately 1996 to 
2003. On or about September 28, 2012, Horvath pled guilty in 
federal court to conspiracy and securities fraud for insider 
9 

trading Horvath committed while at SIGMA CAPITAL, including but 
not limited to insider trading in relation to Dell Inc. ("Dell") 
in August 2008 and NVIDIA Corporation ("NVIDIA") in May 2009. 
Horvath admitted at his guilty plea that he obtained Inside 
Information about Dell and NVIDIA and provided the Inside 
Information to Steinberg, who executed trades in these stocks 
based on that information. On or about March 28, 2013, a grand 
jury in the Southern District of New York returned an indictment 
charging Steinberg with insider trading at SIGMA CAPITAL. 
d. Noah Freeman was a SAC PM specializing in the 
technology sector who was employed by SAC CAPITAL LLC in 
approximately 2008 and by SAC CAPITAL LP from approximately 2009 
to early 2010. While serving as a portfolio manager, Noah 
Freeman obtained and/or traded on Inside Information from 
various technology companies, including but not limited to, 
Research in Motion, Ltd. ("RIMM"), NVIDIA, Marvell Technology 
Group, Ltd. ("Marvell") , Avnet, Inc. ( "Avnet") , Fairchild 
Semiconductor ("Fairchild"), Atheros Communications, Inc. 
("Atheros"), Broadcom and Dell. On or about February 7, 2011, 
Noah Freeman pled guilty in federal court to, among other 
things, conspiracy and securities fraud for insider trading he 
committed while employed by SAC CAPITAL LLC and SAC CAPITAL LP. 
10 

At his guilty plea, Freeman admitted that he obtained Inside 
Information, and that he purchased and sold securities based in 
part on such Inside Information in connection with his 
employment at SAC CAPITAL LLC and SAC CAPITAL LP. 
e. Donald Longueuil was a SAC PM specializing in the 
technology sector who was employed by CR INTRINSIC from 
approximately 2008 through 2010. While serving as a portfolio 
manager, Longueuil obtained and/or traded on Inside Information 
from various technology companies, including but not limited to, 
RIMM, NVIDIA, Marvell, Avnet, Fairchild, Atheros, Broadcom and 
Dell. On or about April 28, 2011, Longueuil pled guilty in 
federal court to, among other things, conspiracy and securities 
fraud for insider trading he committed while employed by CR 
INTRINSIC. At his guilty plea, Longueuil admitted that, while 
he was employed by CR INTRINSIC, he received Inside Information 
for the purpose of trading on that information at CR INTRINSIC. 
f. Mathew Martoma was a SAC PM specializing in the 
health care sector employed by CR INTRINSIC from approximately 
2006 to 2010. On or about December 21, 2012, a grand jury in 
the Southern District of New York returned an indictment 
charging Martoma with insider trading at CR INTRINSIC relating 
to shares of Elan Corporation, plc ("Elan") and Wyeth. 
11 

g. Richard Lee was a SAC PM employed by SAC CAPITAL 
LP 
between approximately April 2009 and June 2011, and again 
between approximately September 2012 and March 2013, who focused 
on "special situations" across industry sectors such as mergers, 
acquisitions, private equity buy-outs and corporate 
restructurings. While serving as a SAC PM, Richard Lee obtained 
Inside Information with respect to various securities, including 
but not limited to, Yahoo! Inc. ("Yahoo") and 3Com Corporation 
("3COM"). On or about July 23, 2013, Richard Lee pled guilty in 
federal court to an information charging Lee with conspiracy and 
securities fraud in connection with his employment at SAC 
CAPITAL LP. At his guilty plea, Richard Lee admitted that he 
obtained Inside Information and that he purchased and sold 
securities based in part on such Inside Information in 
connection with his employment at SAC CAPITAL LP. 
The Facilitation Of The Scheme By The SAC ENTITY DEFENDANTS 
15. The insider trading scheme committed by the SAC 
ENTITY DEFENDANTS through the conduct of their agents was 
facilitated through practices employed by the SAC ENTITY 
DEFENDANTS that encouraged SAC PMs and SAC RAs to pursue 
industry contact networks to obtain an information "edge" 
unavailable to other investors, without effective corresponding 
12 

controls to prevent that "edge" from consisting of Inside 
Information. In particular, as described herein: (1) the SAC 
ENTITY DEFENDANTS routinely sought to hire SAC PMs and SAC RAs 
with networks of contacts likely to have access to Inside 
Information; (2) SAC PMs and SAC RAs were required to share 
their best investment ideas with the SAC Owner while indications 
that those ideas were based on Inside Information were often 
ignored; and (3) the SAC ENTITY DEFENDANTS failed to employ the 
necessary compliance measures to detect or prevent trading on 
Inside Information. 
The Hiring of SAC PMs and SAC RAs With Access To Inside 
Information 
16. In furtherance of the scheme, the SAC ENTITY 
DEFENDANTS sought to hire PMs and RAs believed by the SAC Owner 
and others in SAC management to have an "edge" based in part on 
networks of contacts with employees of public companies in the 
sector in which the SAC PM or SAC RA specialized. The focus on 
hiring employees with such networks was not balanced by any 
corresponding effort to ensure that prospective SAC PMs and SAC 
RAs did not use these contacts to obtain illegal Inside 
Information. 
17. The first stage of SAC's hiring process was 
handled by the SAC "business development" department, which 
13 

sought to build relationships with and recruit SAC PMs and SAC 
RAs. E-mails from the business development team to the SAC 
Owner and others reflected an emphasis on hiring personnel with 
company contacts in their respective sectors. For example, a 
brief write-up of a SAC PM candidate specializing in the 
industrial sector forwarded to the SAC Owner on or about 
November 16, 2008, described the candidate as "the guy who knows 
the quarters cold, has a share house in the Hamptons with the 
CFO of [a Fortune 100 industrial sector company] , tight with 
management." 
18. After a SAC PM or SACRA candidate was 
preliminarily approved for hiring, the SAC ENTITY DEFENDANTS 
subjected the candidate to a "due diligence" process that 
involved interviewing the candidate's references, prior 
employers and others, in part to identify the strength of the 
candidate's industry contact networks. For example, the due 
diligence report for Horvath -who obtained Inside Information 
from company insiders while employed at SIGMA CAPITAL -
identified Horvath's "contacts with companies" as a "key 
strength" and noted that Horvath generated investment ideas by 
"mining his industry contact network for datapoints." Likewise, 
the due diligence report for Martoma -who is charged with 
14 

trading based on Inside Information from doctors with access to 
confidential drug trial data while employed at CR INSTRINSIC -
referred to Martoma's health care "industry contacts beyond 
management[]" including through two expert networking firms and 
Martoma's personal "network of doctors in the field." There was 
no reference in the due diligence reports for Horvath or Martoma 
(or, generally, for other candidates) to ethics, integrity, 
compliance or whether the candidate had or was likely to use the 
referenced contacts to obtain or to make trades based on Inside 
Information. 
19. In fact, on at least one occasion the SAC ENTITY 
DEFENDANTS hired a candidate despite a recognized reputation for 
insider trading. 
In particular, in or around the summer of 
2008, the SAC Owner received a warning from an employee of 
another hedge fund ("Hedge Fund A") that Richard Lee, who 
previously had worked at Hedge Fund A, and was known for being 
part of Hedge Fund A's "insider trading group." A SAC business 
development employee subsequently informed Richard Lee that the 
SAC Owner had decided to hire Richard Lee as a SAC PM anyway, 
overruling objections from SAC's legal department. Richard Lee 
then proceeded to obtain and make trades based on Inside 
15 

Information shortly after starting his employment at SAC Capital 
in approximately April 2009. 
The Failure By The SAC Owner And Others To Question SAC Trading 
Recommendations Bearing Indicia Of Being Based On Inside 
Information 
20. Furthering the scheme, the SAC Owner encouraged 
SAC PMs and SAC RAs, through financial incentives and otherwise, 
to share "high conviction" trading ideas -including ideas 
developed through industry contacts -while often ignoring 
indications that trading recommendations were based on Inside 
Information. 
21. In particular, on multiple occasions SAC PMs and 
SAC RAs communicated to the SAC Owner trading recommendations 
sourced to information from a contact "at" a public company or 
with similar language. In these cases, the SAC Owner failed to 
inquire whether the contact was permitted to disclose the 
company information or to take other steps to ensure that the 
trade was not based on Inside Information. For example: 
a. In an e-mail dated June 11, 2008, a SAC PM 
employed by CR INTRINSIC ("CR Intrinsic PM-1") wrote to the SAC 
Owner that "my guy at [company name]" had explained why certain 
anticipated acquisitions had not occurred. In a second e-mail, 
dated May 3, 2009, CR-Intrinsic PM-1 wrote to the SAC Owner, 
16 

referring to the same company: "I am very comfortable that this 
qtr is going to be solid vs current consensus and guidance. I 
am getting coffee on tues afternoon with the guy who runs north 
American generics business." The SAC Owner replied: "Let's talk 
later." 
b. On or about October 30, 2007, Horvath e-mailed a 
trading recommendation concerning Sun Microsystems, Inc. ("Sun") 
to an e-mail address used by the SAC Owner to receive investment 
ideas from SAC PMs and SAC RAs. Horvath wrote: "My edge is 
contacts at the company and their distribution channel." The 
SAC Owner did not ask Horvath whether his "contacts at the 
company" were permitted to share the information that had 
provided Horvath with his "edge." Similarly, on or about August 
26, 2008, Horvath wrote an e-mail to Steinberg, which was 
forwarded to the SAC Owner, stating that his recommendation to 
sell Dell stock in advance of a quarterly earnings announcement 
was based on a "2nd hand read from someone at the company" who 
had "been very good in the last two quarters." The SAC Owner 
did not question Horvath about his contact but did begin selling 
off his approximately $12.5 million Dell position approximately 
10 minutes after receiving the e-mail. 
17 

c. On or about February 26, 2007, Martoma initiated 
a chat with the SAC Owner via instant message relating to a drug 
approval announcement by a major pharmaceutical company ("Pharma 
Company 1") that had taken the financial market by surprise. 
Martoma·advised the SAC Owner that Martoma had a "better edge" 
with respect to upcoming news about a second drug in development 
by Pharma Company 1 because "the second product is partnered 
with a small biotech company, while first was internal to 
[Pharma Company 1] only." The SAC Owner responded: "and I would 
think u have a line into small co," to which Martoma responded 
"yes." 
d. On or about April 11, 2008 and April 12, 2008, 
the SAC Owner exchanged several e-mails with two CR INTRINSIC 
health care analysts ("Analyst 1" and "Analyst 2") about 
information they had obtained through a paid consultation with a 
clinical investigator (the "Clinical Investigator") for a drug 
trial being conducted by Elan and Wyeth for an Alzheimer's 
disease drug (the "Drug Trial"). Analyst 2 e-mailed the SAC 
Owner that the Clinical Investigator had told Analyst 2 that he 
"had seen the data as of December" for the Drug Trial, and that 
"it was not stat significant." In a second e-mail to the SAC 
Owner, Analyst 1 added that the Clinical Investigator had told 
18 

them that the data from an "interim look" was "'close' to 
significant" in some cases and that it "was possible but 
unlikely" that the "final data" would be statistically 
significant. In a third e-mail, Analyst 1 responded to the SAC 
Owner's question about whether it was likely that the Clinical 
Investigator had seen this data by reiterating that the Clinical 
Investigator "said he saw the data before agreeing to be in the 
study" and that it would not be "unreasonable" for the Clinical 
Investigator to be among the "small # of ppl [who] have seen the 
[Drug Trial] data." The SAC Owner did not question or express 
concern that Analyst 1 or Analyst 2 were paying a doctor 
involved in a drug trial for a consultation about non-public 
drug trial data seen by only a "small# of ppl." Instead, the 
SAC Owner directed Martoma to follow-up with the Clinical 
Investigator, which Martoma did and reported back. 
e. Indeed, the SAC Owner expressed confidence 
in Martoma on the grounds that Martoma was "close" to sources of 
information about the Drug Trial while failing to express 
concern about the potential for Martoma to receive Inside 
Information from these sources. For example, in an instant 
message exchange on or about April 6, 2008, the SAC Owner 
responded to Analyst 2's inquiry as to whether the SAC Owner had 
19 

"been able to get a better sense of why Martoma thinks" the Drug 
Trial data would be statistically significant as follows: "seems 
like Mat [Martoma] has a lot of good relationships in this 
arena." 
In another instant message, on or about March 26, 2008, 
the SAC Owner responded to Analyst 1's question as to whether 
Martoma and a second person "know something or do they have a 
very strong feeling" as follows: "tough one[.] I think Mat 
[Martoma] is closest to it." Analyst 1 and Analyst 2 complained 
in e-mails between themselves that Martoma was "telling ppl he 
has black edge" -    a phrase meaning Inside Information -with 
respect to the outcome of the Drug Trial. Analyst 1 and Analyst 
2 expressed no concern in these e-mails about the legality of 
Martoma proposing to trade on the Inside Information, focusing 
instead on whether Martoma was being "intellectually honest" in 
telling people he had "black edge" when Analyst 1 and Analyst 2 
believed it was not yet possible to know the Drug Trial results. 
22. Similarly, in connection with the hiring process, 
the SAC Owner failed to question candidates who at minimum 
implied that their "edge" was based on sources of Inside 
Information. For example, on several occasions in June 2009, CB 
Lee spoke to the SAC Owner about the possibility of providing 
the SAC Owner with trading ideas on particular companies in 
20 

return for a payout on the SAC Owner's profits. CB Lee told the 
SAC Owner that he had people in sales and in finance at NVIDIA 
who gave him information relating to quarterly earnings and a 
contact at TSMC who provided him with wafer data. The SAC Owner 
did not express any concern about CB Lee's proposed sources of 
information during these conversations. 
23. Also furthering the scheme, the SAC Owner 
fostered a culture that focused on not discussing Inside 
Information too openly, rather than not seeking or trading on 
such information in the first place. 
For example, on or about 
July 29, 2009, a recently hired SAC PM (the "New PM") sent an 
instant message to the SAC Owner and relayed that, due to some 
"recent research," the New PM planned to short Nokia when he 
started work 10 days later. The New PM apologized for being 
"cryptic" but noted that the head of SAC compliance "was giving 
me Rules 101 yesterday -so I won't be saying much [.] [T] oo 
scary." The SAC Owner did not react or respond in the instant 
message to the New PM's proposal to trade securities based on 
information that the New PM was "scar[ed]" to tell the SAC Owner 
for fear of violating compliance rules. 
21 

Ineffective Compliance Programs That Failed To Detect Or Thwart 
Insider Trading 
24. Furthering the scheme, the SAC ENTITY DEFENDANTS 
employed limited compliance measures designed to detect or 
prevent insider trading by SAC PMs or SAC RAs. As an initial 
matter, the SAC ENTITY DEFENDANTS automatically purged all 
instant messages after 36 hours and all e-mails not 
affirmatively saved after 30 days until adopting a revised 
document retention policy in September 2008. In addition, prior 
to approximately late 2009, SAC's compliance department rarely 
reviewed electronic communications by SAC employees for 
suspicious terms suggesting potential insider trading, 
notwithstanding the fact that the head of SAC compliance had 
recommended such searches to SAC management as early as 2005. 
25. Although the SAC compliance department, 
beginning in approximately 2006, prohibited the use of expert 
networks to make payments to public company employees for 
industry information, SAC encouraged direct contact with public 
company employees at various levels outside of these networks. 
For example, in or around 2006, when Richard Lee initially 
interviewed for a job at SAC and told a senior SAC executive 
that his investment process involved, among other things, 
consultations through an expert network, the SAC executive 
22 

responded in substance that most SAC PMs relied on their own 
personal networks of industry contacts. 
In fact, as reflected 
in examples noted elsewhere in this Indictment, SAC PMs and SAC 
RAs routinely consulted public company employees at various 
levels and recommended trading ideas to the SAC Owner expressly 
based on information obtained through contacts at these 
companies. 
26. Moreover, notwithstanding that the SAC 
compliance department was apparently aware that expert networks 
presented a risk of insider trading, the SAC compliance 
department failed to effectively monitor SAC employees' use of 
expert networking firms. 
For example, the SAC compliance 
department failed to detect or prevent Martoma from using an 
expert network for approximately 42 consultations with a doctor 
involved in the Drug Trial, even though some of the expert 
networking firm's scheduling e-mails with Martoma-sent through 
the SAC e-mail system -expressly stated that (1) the doctor in 
question had confidential information about the Drug Trial; and 
(2) the purpose of the consultation was to ask the doctor about 
the experimental medicine being tested in the Drug Trial. The 
doctor in question in fact provided Martoma with Inside 
23 

Information about the Drug Trial during many of these 
consultations. 
27. Also furthering the scheme, on several occasions 
SAC management failed to refer trading recommendations that 
appeared to be based on Inside Information to SAC's compliance 
department for investigation. For example, on or about October 
30, 2007, Horvath's trading recommendation emailed to the SAC 
Owner concerning Sun stated n[m]y edge is contacts at the 
company and their distribution channel." Steinberg, who was 
copied on the e-mail, forwarded it to the SIGMA CAPITAL Chief 
Operating Officer (the ncOO") with the comment: ni suspect the 
line about contacts at the company may wake up some of our legal 
eagles." The COO responded: "I think it might precipitate a 
general inquiry to confirm we are not in possession of non 
public information. This seems like an investment idea, not a 
trade and my interpretation of his comment is just that he 
developed good relationships with mgmt. that enhance his comfort 
level." The COO arrived at this benign (and unsubstantiated) 
interpretation without anyone interviewing Horvath about his e-
mail. 
In truth and in fact, Horvath's e-mail was based on 
confidential information about Sun earnings that Horvath had 
obtained from his contact at Sun. 
24 

28. Also furthering the scheme, the limited number of 
internal investigations by the SAC compliance department of 
insider trading were generally weak, with a focus on 
"confirming" with a SAC PM or SAC RA in an interview that an e-
mail implying access to Inside Information was an inartfully 
drafted e-mail. 
In fact, despite numerous documented cases of 
insider trading at SAC -established by, among other things, 
guilty pleas of six former SAC PMs and RAs who each committed 
insider trading on numerous occasions and over a substantial 
period of time while employed at SAC-SAC's compliance 
department contemporaneously identified only a single instance 
of suspected insider trading by its employees in its history. 
29. SAC's resolution of the one case in which it 
identified suspected insider trading also reflected a lack of 
commitment to address the issue. On this occasion, information 
reviewed by SAC's compliance department demonstrated that CR 
Intrinsic PM-1 and a second PM ("SAC PM-1") had received and 
then traded based on an advance tip from an outside health care 
analyst (the "Health Care Analyst") at a research firm doing 
business with the SAC ENTITY DEFENDANTS. In particular, 
evidence reviewed by the SAC compliance department reflected 
that on the evening of July 27, 2009, the Health Care Analyst 
25 

communicated to CR Intrinsic PM-1 that his firm would publicly 
release a negative research report the next day about health 
care company Medicisr Inc. ("Medicis
11
). CR Intrinsic PM-1 then 
told this to the research analyst for SAC PM-1. SAC PM-1
1
S 
research analyst then admitted -as corroborated by e-mails and 
phone records -that he had
1 
at SAC PM-1
1
S direction/ called the 
Health Care Analyst and learned that the negative research 
report would be publicly released in the "pm
11 
of July 28
1 
2009. 
Both CR Intrinsic PM-1 and SAC PM-1 shorted the stock of Medicis 
before the report was released that evening. Despite thisr and 
despite the fact that it was the SAC Owner who had initially 
inquired about the trading/ the consequences were limited. The 
SAC ENTITY DEFENDANTS imposed monetary fines on the two 
offenders
1 
but allowed them to keep their jobs/ and failed to 
report the insider trading to any regulatory or law enforcement 
personnel. 
Examples Of Insider Trading By Agents Of Each Of The 
SAC ENTITY DEFENDANTS 
30. In connection with the scheme described above/ 
SAC CAPITAL LPr SAC CAPITAL LLC
1 
CR INTRINSIC and SIGMA CAPITAL
1 
the defendants/ through the conduct of their agents/ sought to 
obtain and trade upon Inside Information on multiple occasions 
26 

between 1999 and at least 2010. This trading includes -but is 
not limited to -the conduct described below. 
Insider Trading By Agents Of CR INTRINSIC 
31. Agents of CR INTRINSIC, the defendant, obtained 
and traded upon Inside Information on multiple occasions, 
including but not limited to the examples described below: 
a. Trading By Martoma And The SAC Owner In Elan And 
Wyeth. As of mid-July 2008, the SAC Hedge Fund's largest equity 
securities position consisted of over $700 million worth of Elan 
American Depository Receipts ("ADRs") and Wyeth common stock. 
The SAC Owner had accumulated the position in large part on the 
recommendation of Martoma. On or about July 17, 2008, Martoma 
obtained negative Inside Information from a medical doctor 
involved in the Drug Trial being conducted by Elan and Wyeth. 
On or about Saturday, July 19, 2008, Martoma met with the doctor 
in person in Michigan. On or about the morning of Sunday, July 
20, 2008, Martoma spoke by telephone to the SAC Owner, who the 
next day began selling the entire $700 million position and 
shorting approximately $260 million worth of Elan and Wyeth 
stock prior to the public announcement of the Drug Trial results 
on or about July 29, 2008. The SAC Hedge Fund's profits and 
27 

avoided losses from this illegal insider trading amounted to 
approximately $276 million. 
b. Trading By Two SAC PMs And The SAC Owner Based On 
Information From CR Intrinsic RA-1. On various occasions in 
2008 and 2009, a technology sector research analyst for CR 
Intrinsic ("CR Intrinsic RA-1") obtained Inside Information from 
contacts at various technology companies, including earnings 
information from Dell (from the same source who provided Inside 
Information to Horvath) and acquisition-related information from 
Foundry Networks Inc. ("Foundry"). The two SAC PMs to whom CR 
Intrinsic RA-1 reported and the SAC Owner all placed profitable 
trades on one or more occasions shortly after recommendations 
made on the basis of Inside Information known to CR Intrinsic 
RA-1. 
Insider Trading By Agents Of SIGMA CAPITAL 
32. Agents of SIGMA CAPITAL, the defendant, obtained 
and traded upon Inside Information on multiple occasions, 
including but not limited to the examples described below: 
a. Trading By Steinberg And The SAC Owner Based On 
Information From Horvath. On or about August 18, 2008, Horvath 
learned from a contact in his network that an insider at Dell 
had disclosed that Dell's earnings would be below market 
28 

expectations and provided that information to Steinberg, who 
immediately began shorting shares of Dell stock in Steinberg's 
portfolio. On or about August 26, 2008 at 12:37 p.m., Steinberg 
e-mailed Horvath that he had been "talking to [the SAC Owner] 
about Dell earlier today" and that the SAC Owner wanted Horvath 
to "compare notes" with a different SAC PM who had taken a 
contrary, bullish position on Dell. At approximately 1:09 p.m., 
Horvath responded to Steinberg and the bullish SAC PM by e-mail: 
G 
"I have a 2nd hand read from someone at the company -this is 
3rd quarter I have gotten this read from them and it has been 
very good in the last two quarters. Please keep to 
yourselves as obviously not well known." The e-mail further 
reported that the gross margin for Dell would fall short by "50-
80 bps [basis points]." The bullish SAC PM then forwarded the 
Horvath e-mail to a "research trader" for the SAC Owner who 
assisted the SAC Owner in trading technology stocks. The 
research trader, in turn, forwarded Horvath's e-mail directly to 
the SAC Owner at approximately 1:29 p.m. and spoke by phone to 
the SAC Owner at 1:37 p.m. for approximately one minute. At 
approximately 1:39 p.m., the SAC Owner began selling Dell shares 
in his own portfolio, closing out his entire approximately $12.5 
million position prior to the disappointing earnings 
29 

announcement, avoiding losses of approximately $1.7 million. On 
or about August 28, 2008, after Dell had publicly announced 
earnings that, consistent with Horvath's Inside Information, 
were below market expectations, the SAC Owner e-mailed 
Steinberg's group, including Horvath: "Nice job on dell." 
b. Trading By Sigma PM-1 Based On Inside Information 
From Wang. Between approximately 2002 and 2005, in connection 
with his employment as a SAC RA, Wang recommended trades to 
Sigma PM-1 based on Inside Information that Wang obtained from a 
network of contacts at publicly-traded technology companies, 
including but not limited to TSMC, Cisco, Broadcom, eBay, 
Cypress, Polycom, QLogic and Cirrus. 
c. Trading Based On Inside Information From CB Lee. 
Between approximately 2008 and 2009, former SIGMA CAPITAL PM CB 
Lee, who by then was operating his own hedge fund, recommended 
trades based on Inside Information to Sigma PM-1. The Inside 
Information involved various technology sector stocks, including 
Dell and NVIDIA. 
For example, in a recorded call on or about 
January 16, 2009, CB Lee told Sigma PM-1, "between you and me," 
that "a friend of my cousin" who "works for Dell finance," is 
"telling me to avoid the stock for Q2, because Q2 is gonna be 
horrible." 
In a follow-up recorded call on or about January 23, 
30 

2009, CB Lee reiterated to Sigma PM-1 that "I do have a contact 
at Dell, he's in finance" and that the contact was reporting 
that the "April quarter could see a problem with gross margins" 
because sales to businesses were "very weak and that's where 
most of the profitability is." 
Insider Trading By Agents Of SAC CAPITAL LP 
33. Agents of SAC CAPITAL LP, the defendant, obtained 
and traded upon Inside Information on multiple occasions, 
including but not limited to the examples described below: 
a. Trading By Richard Lee. On various 
occasions between approximately April 2009 through approximately 
2010, Richard Lee -who had been hired by SAC CAPITAL LP despite 
a warning to the SAC Owner that he had been part of an "insider 
trading group" at a prior employer -traded on Inside 
Information in the $1.25 billion "special situations" SAC 
portfolio Richard Lee jointly managed with a second SAC PM. For 
example, Richard Lee obtained, from a contact at a private 
equity firm with a stake in Yahoo, both early access to a Yahoo 
earnings report and information relating to a contemplated 
partnership with Microsoft, the latter of which ultimately took 
place in or around July 2009. Richard Lee -as well as other 
SAC PMs -also spoke to a technology analyst (the "Tech 
31 . 

Analyst") from a research firm doing business with the SAC Hedge 
Funds about the potential Yahoo-Microsoft partnership. In a 
recorded call with Richard Lee on or about July 10, 2009, the 
Tech Analyst told Richard Lee that his "buddy," a "senior guy at 
Microsoft" who had been "very, very accurate in the past," told 
the Tech Analyst that a "senior team from Yahoo" had arrived at 
Microsoft to meet "the two senior-most people in [the] Microsoft 
internet business" to restart deal talks. 
Insider Trading By Agents Of Multiple SAC ENTITY DEFENDANTS, 
Including SAC CAPITAL LLC and SAC CAPITAL LP 
34. In some cases, such as the examples described 
herein, instances of insider trading involved agents of multiple 
SAC ENTITY DEFENDANTS either because different employees 
involved in the trading worked for different SAC management 
companies or because the employees switched between management 
companies during the course of their employment. Examples of 
such trading include but are not limited to the following: 
a. Trading.At SAC CAPITAL LLC And SIGMA CAPITAL 
Based On Inside Information From CB Lee. In connection with his 
employment as a SAC RA at SAC CAPITAL LLC and then SIGMA 
CAPITAL, CB Lee sought and obtained Inside Information through 
direct and indirect contacts at various technology companies 
between approximately 1999 and 2004, including but not limited 
32 

to Intel, AMD, and Altera. CB Lee then recommended trades based 
on this Inside Information to the portfolio manager to whom he 
reported and in some instances to the SAC Owner directly. In 
these trading recommendations, CB Lee typically described the 
source of the information as being from "my guy," "my contact," 
or "my check" "at" the company in question. 
b. Trading At SAC CAPITAL LLC, SAC CAPITAL LP And 
CR INTRINSIC Based On Inside Information From Freeman And 
Longueuil. In connection with their employment, Freeman 
(employed first by SAC CAPITAL LLC and then SAC CAPITAL LP) and 
Longueuil (employed by CR INTRINSIC) obtained and traded on 
Inside Information between approximately 2008 and 2010 in a 
vari~ty of technology companies, including but not limited to 
RIMM, NVIDIA, Marvell, Avnet, Fairchild, Atheros, Broadcom and 
Dell. 
Statutory Allegations 
35. At various times from in or about 1999, through 
at least in or about 2010, in the Southern District of New York 
and elsewhere, SAC CAPITAL LP, SAC CAPITAL LLC, CR INTRINSIC, 
and SIGMA CAPITAL, the defendants, willfully and knowingly, 
having devised and intending to devise a scheme and artifice to 
defraud, and for obtaining money and property by means of false 
33 

and fraudulent pretenses, representations and promises, did 
transmit and cause to be transmitted by means of wire, radio and 
television communication in interstate and foreign commerce, 
writings, signs, signals, pictures, and sounds for the purpose 
of executing such scheme and artifice, to wit, SAC ENTITY 
DEFENDANT employees and agents obtained by telephone, e-mail and 
other electronic forms of interstate communication, while 
located in SAC ENTITY DEFENDANT offices in Manhattan, New York 
and elsewhere, Inside Information concerning various public 
company stocks, some of which were publicly-traded on a stock 
exchange in Manhattan, New York, for the purpose of executing 
securities transactions based in whole or in part on that Inside 
Information. 
(Title 18, United States Code, Sections 1343 and 2.) 
COUNT TWO 
(Securities Fraud: SAC CAPITAL LP) 
The Grand Jury further charges: 
36. The allegations contained in paragraphs 1 through 
34 are repeated and realleged as though fully set forth herein. 
37. From in or about 2009, up through and including 
at least in or about 2010, in the Southern District of New York 
and elsewhere, SAC CAPITAL LP, the defendant, willfully and 
34 

knowingly, directly and indirectly, by the use of means and 
instrumentalities of interstate commerce, the mails and the 
facilities of national securities exchanges, in connection with 
the purchase and sale of securities, did use and employ 
manipulative and deceptive devices and contrivances, in 
violation of Title 17, Code of Federal Regulations, Section 
240.10b-5, by (a) employing devices, schemes and artifices to 
defraud; (b) making untrue statements of material facts and 
omitting to state material facts necessary in order to make the 
statements made, in light of the circumstances under which they 
were made, not misleading; and (c) engaging in acts, practices 
and courses of business which operated and would operate as a 
fraud and deceit upon persons, to wit, SAC CAPITAL LP, through 
its employees and agents, engaged in a scheme to obtain and 
trade upon Inside Information. 
(Title 15, United States Code, Sections 78j (b) & 78ff; 
Title 17, Code of Federal Regulations, Section 240.10b-5 & 
240.10b5-2; and Title 18, United States Code, Section 2.) 
COUNT THREE 
(Securities Fraud: SAC CAPITAL LLC) 
The Grand Jury further charges: 
38. The allegations contained in paragraphs 1 through 
34 are repeated and realleged as though fully set forth herein. 
35 

39. From in or about 1999, up through and including 
2008, in the Southern District of New York and elsewhere, SAC 
CAPITAL LLC, the defendant, willfully and knowingly, directly 
and indirectly, by the use of means and instrumentalities of 
interstate commerce, the mails and the facilities of national 
securities exchanges, in connection with the purchase and sale 
of securities, did use and employ manipulative and deceptive 
devices and contrivances, in violation of Title 17, Code of 
Federal Regulations, Section 240.10b-5, by (a) employing 
devices, schemes and artifices to defraud; (b) making untrue 
statements of material facts and omitting to state material 
facts necessary in order to make the statements made, in light 
of the circumstances under which they were made, not misleading; 
and (c) engaging in actsr practices and courses of business 
which operated and would operate as a fraud and deceit upon 
persons, to wit, SAC CAPITAL LLC, through its employees and 
agents, engaged in a scheme to obtain and trade upon Inside 
Information. 
(Title 15
1 
United States Code, Sections 78j (b) & 78ff; 
Title 17, Code of Federal Regulations, Section 240.10b-5 & 
240.10b5-2; and Title 18, United States Code, Section 2.) 
36 

COUNT FOUR 
(Securities Fraud: CR INTRINSIC) 
The Grand Jury further charges: 
40. The allegations contained in paragraphs 1 through 
34 are repeated and realleged as though fully set forth herein. 
41. From in or about 2006 up through and including at 
least in or about 2009, in the Southern District of New York and 
elsewhere, CR INTRINSIC, the defendant, willfully and knowingly, 
directly and indirectly, by the use of means and 
instrumentalities of interstate commerce, the mails and the 
facilities of national securities exchanges, in connection with 
the purchase and sale of securities, did use and employ 
manipulative and deceptive devices and contrivances, in 
violation of Title 17, Code of Federal Regulations, Section 
240.10b-5, by (a) employing devices, schemes and artifices to 
defraud; (b) making untrue statements of material facts and 
omitting to state material facts necessary in order to make the 
statements made, in light of the circumstances under which they 
were made, not misleading; and (c) engaging in acts, practices 
and courses of business which operated and would operate as a 
fraud and deceit upon persons, to wit, CR INTRINSIC, through its 
employees and agents, engaged in a scheme to obtain and trade 
37 

upon Inside Information. 
(Title 15, United States Code, Sections 78j (b) & 78ff; 
Title 17, Code of Federal Regulations, Section 240.10b-5 & 
240.10b5-2; and Title 18, United States Code, Section 2.) 
COUNT FIVE 
(Securities Fraud: SIGMA CAPITAL) 
The Grand Jury further charges: 
42. The allegations contained in paragraphs 1 through 
34 are repeated and realleged as though fully set forth herein. 
43. From in or about 2002, up through and including 
at least in or about 2009, in the Southern District of New York 
and elsewhere, SIGMA CAPITAL, the defendant, willfully and 
knowingly, directly and indirectly, by the use of means and 
instrumentalities of interstate commerce, the mails and the 
facilities of national securities exchanges, in connection with 
the purchase and sale of securities, did use and employ 
manipulative and deceptive devices and contrivances, in 
violation of Title 17, Code of Federal Regulations, Section 
240.10b-5, by (a) employing devices, schemes and artifices to 
defraud; (b) making untrue statements of material facts and 
omitting to state material facts necessary in order to make the 
statements made, in light of the circumstances under which they 
were made, not misleading; and (c) engaging in acts, practices 
38 

and courses of business which operated and would operate as a 
fraud and deceit upon persons, to wit, SIGMA CAPITAL, through 
its employees and agents, engaged in a scheme to obtain and 
trade upon Inside Information. 
(Title 15, United States Code, Sections 78j (b) & 78ffi 
Title 17, Code of Federal Regulations, Section 240.10b-5 & 
240.10b5-2i and Title 18, United States Code, Section 2.) 
FORFEITURE ALLEGATION 
44. As a result of committing the offenses alleged in 
Counts One through Five of this Indictment, the SAC ENTITY 
DEFENDANTS shall forfeit to the United States, pursuant to Title 
18, United States Code, Section 981(a) (1) (C), and Title 28, 
United States Code, Section 2461, all property, real and 
personal, which constitutes or is derived from proceeds 
traceable to the commission of those offenses. 
Substitute Assets Provision 
45. If any of the above-described forfeitable 
property, as a result of any act or omission of the defendants: 
a. cannot be located upon the exercise of due 
diligencei 
b. has been transferred or sold to, or 
deposited with, a third partyi 
39 

c . has been placed beyond the jurisdiction of 
the court; 
d . has been substantially diminished in value; 
or 
e . has been commingled with other property 
which cannot be divided without difficulty; 
it is the intent of the United States, pursuant to Title 21, 
United States Code, Section 853(p), to seek forfeiture of any 
other property of said defendant up to the value of the 
forfeitable propert y described above. 
(Title 18, United States Code, Section 981; Title 21, United 
States, Section 853(p); Title 28, United States Code, 
Section 2461.} 
PREET BHARARA 
United States Attorney 
40 

Form No. USA-33s-274 (Ed. 9-25-58) 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
UNITED STATES OF AMERICA 
-v. -
S.A.C. CAPITAL ADVISORS, L.P. , 
S.A.C. CAPITAL ADVISORS, LLC, 
CR INTRINSIC INVESTORS, LLC, and 
SIGMA CAPITAL MANAGEMENT, LLC, 
Defendants. 
INDICTMENT 
13 Cr  . 
(18 u . s.c. §§ 2, 1343; Title 15, United 
States Code, Sections 78j (b) & 78ff; 
Title 17, Code of Federal Regulations, 
Section 240.10b-5) 
PREET BHARARA 
United States Attorney. 

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

UNITED STATES OF AMERICA 

- v. -

S.A.C. CAPITAL ADVISORS, L.P., 
S.A.C. CAPITAL ADVISORS LLC, 
CR INTRINSIC INVESTORS, LLC, and 
SIGMA CAPITAL MANAGEMENT, LLC, 

Defendants. 

X 

- - - - - - - - - - - - - - - - - X 

COUNT ONE 

(Wire Fraud) 

The Grand Jury charges: 

SEALED 
INDICTMENT 

1. As described below, this Indictment charges the 

corporate entities responsible for the management of a major 

hedge fund with criminal responsibility for insider trading 

offenses committed by numerous employees and made possible by 

institutional practices that encouraged the widespread 

solicitation and use of illegal inside information. Unlawful 

conduct by individual employees and an institutional 

indifference to that unlawful conduct resulted in insider 

trading that was substantial, pervasive and on a scale without 

known precedent in the hedge fund industry. 

The SAC Capital Entities 

2. At all times relevant to this Indictment, an 

1 

individual residing in Greenwich, Connecticut (the "SAC Owner") 



operated a group of affiliated hedge funds (collectively, the 

"SAC Hedge Fund" or "SAC"). The SAC Hedge Fund, founded by the 

SAC Owner in or around 1992, included, at its peak, over $15 

billion of assets under management. The majority of the capital 

managed by the SAC Hedge Fund at all relevant times belonged to 

the SAC Owner himself, with the balance of capital provided by 

outside investors. 

3. The SAC Owner operated the SAC Hedge Fund through 

his ownership of several fund management companies, which served 

as investment advisors for the SAC Hedge Fund. These management 

companies generally charged outside investors in the SAC Hedge 

Fund annual fees of approximately three percent of assets under 

management and up to 50 percent of investment returns. The 

principal management companies were as follows: (i) CR INTRINSIC 

INVESTORS, LLC ("CR INTRINSIC"), a Delaware limited liability 

company; (ii) SIGMA CAPITAL MANAGEMENT, LLC ("SIGMA CAPITAL"), a 

Delaware limited liability company; (iii) S.A.C. CAPITAL 

ADVISORS, LLC ("SAC CAPITAL LLC"), a Delaware limited liability 

company that actively managed investments in the SAC Hedge Fund 

through approximately 2008; and (iv) S.A.C. CAPITAL ADVISORS, 

L.P. ("SAC CAPITAL LP") a Delaware limited partnership that 

actively managed investments in the SAC Hedge Fund beginning in 

2 



approximately 2009 (collectively, the "SAC ENTITY DEFENDANTS"). 

Overview of The Scheme 

4. At various times between in or about 1999 through 

at least in or about 2010, employees and agents of SAC CAPITAL 

LP, SAC CAPITAL LLC, CR INTRINSIC, and SIGMA CAPITAL, the 

defendants, obtained material, non-public information ("Inside 

Information") relating to publicly-traded companies and traded 

on that Inside Information in order to (i) increase the return 

on investment in the SAC Hedge Fund; and (ii) increase fees 

received by the SAC ENTITY DEFENDANTS. 

5. The SAC ENTITY DEFENDANTS committed the insider 

trading scheme through the acts of, among others, numerous 

portfolio managers ("SAC PMs") and research analysts ("SAC RAs") 

who engaged in a pattern of obtaining Inside Information from 

dozens of publicly-traded companies across multiple industry 

sectors. Employees of the SAC ENTITY DEFENDANTS traded on 

Inside Information themselves and, at times, recommended trades 

to the SAC Owner based on Inside Information. 

6. The SAC ENTITY DEFENDANTS enabled and promoted 

the Insider Trading scheme through several means detailed 

herein. First, the SAC ENTITY DEFENDANTS sought to hire SAC PMs 

and SAC RAs with proven access to public company contacts likely 

3 



to possess Inside Information. Secondr the SAC ENTITY 

DEFENDANTS/ employees were financially incentivized to recommend 

to the SAC Owner "high conviction~~ trading ideas in which the 

SAC PM had an "edger over other investors/ but repeatedly were 

not questioned when making trading recommendations that appeared 

to be based on Inside Information. Third 1 on numerous occasions 

the SAC ENTITY DEFENDANTS failed to employ effective compliance 

procedures or practices to prevent SAC PMs and SAC RAs from 

engaging in insider trading. 

7. At bottom 1 the encouragement by the SAC ENTITY 

DEFENDANTS of SAC PMs and SAC RAs to pursue aggressively an 

information "edge 11 overwhelmed limited SAC compliance systems. 

Further 1 the relentless pursuit of an information "edge 11 

fostered a business culture within SAC in which there was no 

meaningful commitment to ensure that such "edge 11 came from 

legitimate research and not Inside Information. The predictable 

and foreseeable result 1 as charged herein 1 was systematic 

insider trading by the SAC ENTITY DEFENDANTS resulting in 

hundreds of millions of dollars of illegal profits and avoided 

losses at the expense of members of the investing public. 

4 



The Operation Of The SAC Hedge Fund 

8. The SAC Hedge Fund functioned as a collection of 

dozens of individual portfolios, each headed by a portfolio 

manager responsible for his or her portfolio's profit-and-loss 

results, and each charged with sharing the best trading ideas 

with the SAC Owner directly. 

9. In particular, the SAC Owner allocated investment 

capital between and among up to approximately 100 internal 

portfolios, each of which was generally managed by a SAC PM who 

specialized in a particular investment sector, such as 

technology, health care, financial services, industrial, 

consumer, or energy. Each portfolio manager, in turn, typically 

employed one or more research analysts to assist with the 

development of investment ideas for the SAC PM's portfolio. 

10. The SAC Hedge Fund portfolios were in many ways 

autonomous from each other. Each SAC PM had substantial 

discretion to make investment decisions in his or her portfolio, 

even if a position was contrary to a position taken by other SAC 

PMs operating a portfolio in the same sector. Each SAC PM was 

compensated principally based on the performance of his or her 

own portfolio, and without regard to the investment performance 

of other SAC PMs. Likewise, SAC RAs were compensated largely at 

5 



the discretion of the SAC PM to whom the SAC RA reported and 

based on the profitability of that PM's portfolio. 

11. The largest portfolio in existence at the SAC 

Hedge Fund was, at all relevant times, a portfolio managed by 

the SAC Owner himself. The SAC Owner had sole trading 

discretion over his portfolio and made these decisions 

principally based on trading recommendations from SAC PMs. In 

particular, at all relevant times the SAC Owner required each 

SAC PM to share "high conviction" investment ideas- i.e., the 

investment recommendations in which the SAC PM had the greatest 

confidence - with the SAC Owner. In fact, providing such ideas 

to the SAC Owner was an express part of a SAC PM's duties and 

was emphasized to SAC PMs in the hiring process and once working 

at SAC. 

12. In order to facilitate the collection of top 

trading ideas from the SAC PMs, the SAC ENTITY DEFENDANTS 

employed different systems at various times, including, for 

example, a template filled out on SAC's computer system and 

designated voicemail and e-mail boxes to collect trading ideas. 

In addition to these formal systems, the SAC Owner communicated 

with SAC PMs regularly through various means to ascertain their 

best trading ideas, including during semi-regular Sunday evening 

6 



calls and in-person conversations. To assist in processing SAC 

PM ideas, the SAC Owner at times employed sector-focused 

"research traders" who, among other things, ensured that the 

ideas of SAC PMs in the sector were brought to the SAC Owner's 

attention and monitored the trading of the SAC PMs to ensure 

that the trading was consistent with recommendations made to the 

SAC Owner. 

13. At all relevant times, the SAC ENTITY DEFENDANTS 

formally tracked trades made by the SAC Owner in the portfolio 

he personally managed in order to "tag" or credit the SAC PM 

responsible for the idea. At all relevant times, the SAC ENTITY 

DEFENDANTS paid SAC PMs an annual bonus - which could in some 

cases exceed all other components of compensation - based on a 

percentage of the net profits made by the SAC Owner on trades 

"tagged" to a particular SAC PM. 

SAC PMs and SAC RAs Who Obtained Or Traded On Inside Information 
While Employed By The SAC ENTITY DEFENDANTS 

14. Numerous SAC PMs and SAC RAs, not all of whom 

are identified herein, obtained or traded on Inside Information 

while employed by one or more of the SAC ENTITY DEFENDANTS. 

Each of the eight individual SAC PMs or SAC RAs identified by 

name below have been charged with and/or convicted of trading on 

Inside Information in connection with one or more of the SAC 

7 



ENTITY DEFENDANTS: 

a. Wes Wang ("Wang") was a SACRA specializing 

in the technology sector employed by SIGMA CAPITAL from 

approximately 2002 to 2005. While serving as a SACRA, Wang 

obtained Inside Information with respect to various technology 

companies, including but not limited to Taiwan Semiconductor 

Manufacturing Company Limited ("TSMC"), Cisco Systems, Inc. 

("Cisco"), Broadcom Corporation ("Broadcom"), eBay, Inc. 

( "eBay") , Cypress Semiconductor Corporation ("Cypress") , 

Polycom, Inc. ("Polycom"), QLogic Corporation ("QLogic") and 

Cirrus Logic Inc. ("Cirrus"). Wang provided trading ideas based 

on Inside Information to the portfolio manager to whom he 

reported ("Sigma PM-1"). On or about July 13, 2012, Wang pled 

guilty in federal court to two counts of conspiracy to commit 

securities fraud, one of which involved insider trading in 

connection with Wang's employment at SIGMA CAPITAL from 2002 to 

2005. At his guilty plea, Wang admitted that, while at SIGMA 

CAPITAL, he had obtained Inside Information and provided it to 

Sigma PM-1 to be used for the purchase and sale of securities. 

b. Richard Choo-Beng Lee ("CB Lee") was a SACRA 

specializing in the technology sector employed by SAC CAPITAL 

LLC from approximately 1999 to 2003 and by SIGMA CAPITAL from 

8 



approximately 2003 to 2004. While serving as a SACRA, CB Lee 

obtained Inside Information with respect to various technology 

companies, including but not limited to Intel Corporation 

("Intel") , Advance Micro Devices, Inc. ( "AMD") , and Al tera 

Corporation ("Altera"). CB Lee provided trading ideas based on 

Inside Information to the portfolio manager to whom he reported 

and the SAC Owner. On or about October 13, 2009, CB Lee pled 

guilty in federal court to, among other things, conspiracy to 

commit securities fraud and wire fraud relating to trading 

recommendations based on Inside Information that CB Lee had 

provided to Sigma PM-1 and others following CB Lee's departure 

from SIGMA CAPITAL. At his guilty plea, CB Lee admitted that he 

obtained Inside Information and that he purchased and sold 

securities based in part on such Inside Information. 

c. Jon Horvath was a SACRA specializing in the 

technology sector employed by SIGMA CAPITAL from approximately 

2006 through 2011. Horvath served as a research analyst for 

portfolio manager Michael Steinberg, who has been employed by 

SIGMA CAPITAL from approximately 2003 to the present, and as a 

portfolio manager for SAC CAPITAL LLC from approximately 1996 to 

2003. On or about September 28, 2012, Horvath pled guilty in 

federal court to conspiracy and securities fraud for insider 

9 



trading Horvath committed while at SIGMA CAPITAL, including but 

not limited to insider trading in relation to Dell Inc. ("Dell") 

in August 2008 and NVIDIA Corporation ("NVIDIA") in May 2009. 

Horvath admitted at his guilty plea that he obtained Inside 

Information about Dell and NVIDIA and provided the Inside 

Information to Steinberg, who executed trades in these stocks 

based on that information. On or about March 28, 2013, a grand 

jury in the Southern District of New York returned an indictment 

charging Steinberg with insider trading at SIGMA CAPITAL. 

d. Noah Freeman was a SAC PM specializing in the 

technology sector who was employed by SAC CAPITAL LLC in 

approximately 2008 and by SAC CAPITAL LP from approximately 2009 

to early 2010. While serving as a portfolio manager, Noah 

Freeman obtained and/or traded on Inside Information from 

various technology companies, including but not limited to, 

Research in Motion, Ltd. ("RIMM"), NVIDIA, Marvell Technology 

Group, Ltd. ("Marvell") , Avnet, Inc. ( "Avnet") , Fairchild 

Semiconductor ("Fairchild"), Atheros Communications, Inc. 

("Atheros"), Broadcom and Dell. On or about February 7, 2011, 

Noah Freeman pled guilty in federal court to, among other 

things, conspiracy and securities fraud for insider trading he 

committed while employed by SAC CAPITAL LLC and SAC CAPITAL LP. 

10 



At his guilty plea, Freeman admitted that he obtained Inside 

Information, and that he purchased and sold securities based in 

part on such Inside Information in connection with his 

employment at SAC CAPITAL LLC and SAC CAPITAL LP. 

e. Donald Longueuil was a SAC PM specializing in the 

technology sector who was employed by CR INTRINSIC from 

approximately 2008 through 2010. While serving as a portfolio 

manager, Longueuil obtained and/or traded on Inside Information 

from various technology companies, including but not limited to, 

RIMM, NVIDIA, Marvell, Avnet, Fairchild, Atheros, Broadcom and 

Dell. On or about April 28, 2011, Longueuil pled guilty in 

federal court to, among other things, conspiracy and securities 

fraud for insider trading he committed while employed by CR 

INTRINSIC. At his guilty plea, Longueuil admitted that, while 

he was employed by CR INTRINSIC, he received Inside Information 

for the purpose of trading on that information at CR INTRINSIC. 

f. Mathew Martoma was a SAC PM specializing in the 

health care sector employed by CR INTRINSIC from approximately 

2006 to 2010. On or about December 21, 2012, a grand jury in 

the Southern District of New York returned an indictment 

charging Martoma with insider trading at CR INTRINSIC relating 

to shares of Elan Corporation, plc ("Elan") and Wyeth. 

11 



g. Richard Lee was a SAC PM employed by SAC CAPITAL 

LP between approximately April 2009 and June 2011, and again 

between approximately September 2012 and March 2013, who focused 

on "special situations" across industry sectors such as mergers, 

acquisitions, private equity buy-outs and corporate 

restructurings. While serving as a SAC PM, Richard Lee obtained 

Inside Information with respect to various securities, including 

but not limited to, Yahoo! Inc. ("Yahoo") and 3Com Corporation 

("3COM"). On or about July 23, 2013, Richard Lee pled guilty in 

federal court to an information charging Lee with conspiracy and 

securities fraud in connection with his employment at SAC 

CAPITAL LP. At his guilty plea, Richard Lee admitted that he 

obtained Inside Information and that he purchased and sold 

securities based in part on such Inside Information in 

connection with his employment at SAC CAPITAL LP. 

The Facilitation Of The Scheme By The SAC ENTITY DEFENDANTS 

15. The insider trading scheme committed by the SAC 

ENTITY DEFENDANTS through the conduct of their agents was 

facilitated through practices employed by the SAC ENTITY 

DEFENDANTS that encouraged SAC PMs and SAC RAs to pursue 

industry contact networks to obtain an information "edge" 

unavailable to other investors, without effective corresponding 

12 



controls to prevent that "edge" from consisting of Inside 

Information. In particular, as described herein: (1) the SAC 

ENTITY DEFENDANTS routinely sought to hire SAC PMs and SAC RAs 

with networks of contacts likely to have access to Inside 

Information; (2) SAC PMs and SAC RAs were required to share 

their best investment ideas with the SAC Owner while indications 

that those ideas were based on Inside Information were often 

ignored; and (3) the SAC ENTITY DEFENDANTS failed to employ the 

necessary compliance measures to detect or prevent trading on 

Inside Information. 

The Hiring of SAC PMs and SAC RAs With Access To Inside 
Information 

16. In furtherance of the scheme, the SAC ENTITY 

DEFENDANTS sought to hire PMs and RAs believed by the SAC Owner 

and others in SAC management to have an "edge" based in part on 

networks of contacts with employees of public companies in the 

sector in which the SAC PM or SAC RA specialized. The focus on 

hiring employees with such networks was not balanced by any 

corresponding effort to ensure that prospective SAC PMs and SAC 

RAs did not use these contacts to obtain illegal Inside 

Information. 

17. The first stage of SAC's hiring process was 

handled by the SAC "business development" department, which 

13 



sought to build relationships with and recruit SAC PMs and SAC 

RAs. E-mails from the business development team to the SAC 

Owner and others reflected an emphasis on hiring personnel with 

company contacts in their respective sectors. For example, a 

brief write-up of a SAC PM candidate specializing in the 

industrial sector forwarded to the SAC Owner on or about 

November 16, 2008, described the candidate as "the guy who knows 

the quarters cold, has a share house in the Hamptons with the 

CFO of [a Fortune 100 industrial sector company] , tight with 

management." 

18. After a SAC PM or SACRA candidate was 

preliminarily approved for hiring, the SAC ENTITY DEFENDANTS 

subjected the candidate to a "due diligence" process that 

involved interviewing the candidate's references, prior 

employers and others, in part to identify the strength of the 

candidate's industry contact networks. For example, the due 

diligence report for Horvath - who obtained Inside Information 

from company insiders while employed at SIGMA CAPITAL -

identified Horvath's "contacts with companies" as a "key 

strength" and noted that Horvath generated investment ideas by 

"mining his industry contact network for datapoints." Likewise, 

the due diligence report for Martoma - who is charged with 

14 



trading based on Inside Information from doctors with access to 

confidential drug trial data while employed at CR INSTRINSIC -

referred to Martoma's health care "industry contacts beyond 

management[]" including through two expert networking firms and 

Martoma's personal "network of doctors in the field." There was 

no reference in the due diligence reports for Horvath or Martoma 

(or, generally, for other candidates) to ethics, integrity, 

compliance or whether the candidate had or was likely to use the 

referenced contacts to obtain or to make trades based on Inside 

Information. 

19. In fact, on at least one occasion the SAC ENTITY 

DEFENDANTS hired a candidate despite a recognized reputation for 

insider trading. In particular, in or around the summer of 

2008, the SAC Owner received a warning from an employee of 

another hedge fund ("Hedge Fund A") that Richard Lee, who 

previously had worked at Hedge Fund A, and was known for being 

part of Hedge Fund A's "insider trading group." A SAC business 

development employee subsequently informed Richard Lee that the 

SAC Owner had decided to hire Richard Lee as a SAC PM anyway, 

overruling objections from SAC's legal department. Richard Lee 

then proceeded to obtain and make trades based on Inside 

15 



Information shortly after starting his employment at SAC Capital 

in approximately April 2009. 

The Failure By The SAC Owner And Others To Question SAC Trading 
Recommendations Bearing Indicia Of Being Based On Inside 
Information 

20. Furthering the scheme, the SAC Owner encouraged 

SAC PMs and SAC RAs, through financial incentives and otherwise, 

to share "high conviction" trading ideas - including ideas 

developed through industry contacts - while often ignoring 

indications that trading recommendations were based on Inside 

Information. 

21. In particular, on multiple occasions SAC PMs and 

SAC RAs communicated to the SAC Owner trading recommendations 

sourced to information from a contact "at" a public company or 

with similar language. In these cases, the SAC Owner failed to 

inquire whether the contact was permitted to disclose the 

company information or to take other steps to ensure that the 

trade was not based on Inside Information. For example: 

a. In an e-mail dated June 11, 2008, a SAC PM 

employed by CR INTRINSIC ("CR Intrinsic PM-1") wrote to the SAC 

Owner that "my guy at [company name]" had explained why certain 

anticipated acquisitions had not occurred. In a second e-mail, 

dated May 3, 2009, CR-Intrinsic PM-1 wrote to the SAC Owner, 

16 



referring to the same company: "I am very comfortable that this 

qtr is going to be solid vs current consensus and guidance. I 

am getting coffee on tues afternoon with the guy who runs north 

American generics business." The SAC Owner replied: "Let's talk 

later." 

b. On or about October 30, 2007, Horvath e-mailed a 

trading recommendation concerning Sun Microsystems, Inc. ("Sun") 

to an e-mail address used by the SAC Owner to receive investment 

ideas from SAC PMs and SAC RAs. Horvath wrote: "My edge is 

contacts at the company and their distribution channel." The 

SAC Owner did not ask Horvath whether his "contacts at the 

company" were permitted to share the information that had 

provided Horvath with his "edge." Similarly, on or about August 

26, 2008, Horvath wrote an e-mail to Steinberg, which was 

forwarded to the SAC Owner, stating that his recommendation to 

sell Dell stock in advance of a quarterly earnings announcement 

was based on a "2nd hand read from someone at the company" who 

had "been very good in the last two quarters." The SAC Owner 

did not question Horvath about his contact but did begin selling 

off his approximately $12.5 million Dell position approximately 

10 minutes after receiving the e-mail. 

17 



c. On or about February 26, 2007, Martoma initiated 

a chat with the SAC Owner via instant message relating to a drug 

approval announcement by a major pharmaceutical company ("Pharma 

Company 1") that had taken the financial market by surprise. 

Martoma·advised the SAC Owner that Martoma had a "better edge" 

with respect to upcoming news about a second drug in development 

by Pharma Company 1 because "the second product is partnered 

with a small biotech company, while first was internal to 

[Pharma Company 1] only." The SAC Owner responded: "and I would 

think u have a line into small co," to which Martoma responded 

"yes." 

d. On or about April 11, 2008 and April 12, 2008, 

the SAC Owner exchanged several e-mails with two CR INTRINSIC 

health care analysts ("Analyst 1" and "Analyst 2") about 

information they had obtained through a paid consultation with a 

clinical investigator (the "Clinical Investigator") for a drug 

trial being conducted by Elan and Wyeth for an Alzheimer's 

disease drug (the "Drug Trial"). Analyst 2 e-mailed the SAC 

Owner that the Clinical Investigator had told Analyst 2 that he 

"had seen the data as of December" for the Drug Trial, and that 

"it was not stat significant." In a second e-mail to the SAC 

Owner, Analyst 1 added that the Clinical Investigator had told 

18 



them that the data from an "interim look" was "'close' to 

significant" in some cases and that it "was possible but 

unlikely" that the "final data" would be statistically 

significant. In a third e-mail, Analyst 1 responded to the SAC 

Owner's question about whether it was likely that the Clinical 

Investigator had seen this data by reiterating that the Clinical 

Investigator "said he saw the data before agreeing to be in the 

study" and that it would not be "unreasonable" for the Clinical 

Investigator to be among the "small # of ppl [who] have seen the 

[Drug Trial] data." The SAC Owner did not question or express 

concern that Analyst 1 or Analyst 2 were paying a doctor 

involved in a drug trial for a consultation about non-public 

drug trial data seen by only a "small# of ppl." Instead, the 

SAC Owner directed Martoma to follow-up with the Clinical 

Investigator, which Martoma did and reported back. 

e. Indeed, the SAC Owner expressed confidence 

in Martoma on the grounds that Martoma was "close" to sources of 

information about the Drug Trial while failing to express 

concern about the potential for Martoma to receive Inside 

Information from these sources. For example, in an instant 

message exchange on or about April 6, 2008, the SAC Owner 

responded to Analyst 2's inquiry as to whether the SAC Owner had 

19 



"been able to get a better sense of why Martoma thinks" the Drug 

Trial data would be statistically significant as follows: "seems 

like Mat [Martoma] has a lot of good relationships in this 

arena." In another instant message, on or about March 26, 2008, 

the SAC Owner responded to Analyst 1's question as to whether 

Martoma and a second person "know something or do they have a 

very strong feeling" as follows: "tough one[.] I think Mat 

[Martoma] is closest to it." Analyst 1 and Analyst 2 complained 

in e-mails between themselves that Martoma was "telling ppl he 

has black edge" - a phrase meaning Inside Information - with 

respect to the outcome of the Drug Trial. Analyst 1 and Analyst 

2 expressed no concern in these e-mails about the legality of 

Martoma proposing to trade on the Inside Information, focusing 

instead on whether Martoma was being "intellectually honest" in 

telling people he had "black edge" when Analyst 1 and Analyst 2 

believed it was not yet possible to know the Drug Trial results. 

22. Similarly, in connection with the hiring process, 

the SAC Owner failed to question candidates who at minimum 

implied that their "edge" was based on sources of Inside 

Information. For example, on several occasions in June 2009, CB 

Lee spoke to the SAC Owner about the possibility of providing 

the SAC Owner with trading ideas on particular companies in 

20return for a payout on the SAC Owner's profits. CB Lee told the 

SAC Owner that he had people in sales and in finance at NVIDIA 

who gave him information relating to quarterly earnings and a 

contact at TSMC who provided him with wafer data. The SAC Owner 

did not express any concern about CB Lee's proposed sources of 

information during these conversations. 

23. Also furthering the scheme, the SAC Owner 

fostered a culture that focused on not discussing Inside 

Information too openly, rather than not seeking or trading on 

such information in the first place. For example, on or about 

July 29, 2009, a recently hired SAC PM (the "New PM") sent an 

instant message to the SAC Owner and relayed that, due to some 

"recent research," the New PM planned to short Nokia when he 

started work 10 days later. The New PM apologized for being 

"cryptic" but noted that the head of SAC compliance "was giving 

me Rules 101 yesterday - so I won't be saying much [.] [T] oo 

scary." The SAC Owner did not react or respond in the instant 

message to the New PM's proposal to trade securities based on 

information that the New PM was "scar[ed]" to tell the SAC Owner 

for fear of violating compliance rules. 

21 



Ineffective Compliance Programs That Failed To Detect Or Thwart 
Insider Trading 

24. Furthering the scheme, the SAC ENTITY DEFENDANTS 

employed limited compliance measures designed to detect or 

prevent insider trading by SAC PMs or SAC RAs. As an initial 

matter, the SAC ENTITY DEFENDANTS automatically purged all 

instant messages after 36 hours and all e-mails not 

affirmatively saved after 30 days until adopting a revised 

document retention policy in September 2008. In addition, prior 

to approximately late 2009, SAC's compliance department rarely 

reviewed electronic communications by SAC employees for 

suspicious terms suggesting potential insider trading, 

notwithstanding the fact that the head of SAC compliance had 

recommended such searches to SAC management as early as 2005. 

25. Although the SAC compliance department, 

beginning in approximately 2006, prohibited the use of expert 

networks to make payments to public company employees for 

industry information, SAC encouraged direct contact with public 

company employees at various levels outside of these networks. 

For example, in or around 2006, when Richard Lee initially 

interviewed for a job at SAC and told a senior SAC executive 

that his investment process involved, among other things, 

consultations through an expert network, the SAC executive 

22 



responded in substance that most SAC PMs relied on their own 

personal networks of industry contacts. In fact, as reflected 

in examples noted elsewhere in this Indictment, SAC PMs and SAC 

RAs routinely consulted public company employees at various 

levels and recommended trading ideas to the SAC Owner expressly 

based on information obtained through contacts at these 

companies. 

26. Moreover, notwithstanding that the SAC 

compliance department was apparently aware that expert networks 

presented a risk of insider trading, the SAC compliance 

department failed to effectively monitor SAC employees' use of 

expert networking firms. For example, the SAC compliance 

department failed to detect or prevent Martoma from using an 

expert network for approximately 42 consultations with a doctor 

involved in the Drug Trial, even though some of the expert 

networking firm's scheduling e-mails with Martoma- sent through 

the SAC e-mail system - expressly stated that (1) the doctor in 

question had confidential information about the Drug Trial; and 

(2) the purpose of the consultation was to ask the doctor about 

the experimental medicine being tested in the Drug Trial. The 

doctor in question in fact provided Martoma with Inside 

23 



Information about the Drug Trial during many of these 

consultations. 

27. Also furthering the scheme, on several occasions 

SAC management failed to refer trading recommendations that 

appeared to be based on Inside Information to SAC's compliance 

department for investigation. For example, on or about October 

30, 2007, Horvath's trading recommendation emailed to the SAC 

Owner concerning Sun stated n[m]y edge is contacts at the 

company and their distribution channel." Steinberg, who was 

copied on the e-mail, forwarded it to the SIGMA CAPITAL Chief 

Operating Officer (the ncOO") with the comment: ni suspect the 

line about contacts at the company may wake up some of our legal 

eagles." The COO responded: "I think it might precipitate a 

general inquiry to confirm we are not in possession of non 

public information. This seems like an investment idea, not a 

trade and my interpretation of his comment is just that he 

developed good relationships with mgmt. that enhance his comfort 

level." The COO arrived at this benign (and unsubstantiated) 

interpretation without anyone interviewing Horvath about his e-

mail. In truth and in fact, Horvath's e-mail was based on 

confidential information about Sun earnings that Horvath had 

obtained from his contact at Sun. 

24 



28. Also furthering the scheme, the limited number of 

internal investigations by the SAC compliance department of 

insider trading were generally weak, with a focus on 

"confirming" with a SAC PM or SAC RA in an interview that an e­

mail implying access to Inside Information was an inartfully 

drafted e-mail. In fact, despite numerous documented cases of 

insider trading at SAC - established by, among other things, 

guilty pleas of six former SAC PMs and RAs who each committed 

insider trading on numerous occasions and over a substantial 

period of time while employed at SAC- SAC's compliance 

department contemporaneously identified only a single instance 

of suspected insider trading by its employees in its history. 

29. SAC's resolution of the one case in which it 

identified suspected insider trading also reflected a lack of 

commitment to address the issue. On this occasion, information 

reviewed by SAC's compliance department demonstrated that CR 

Intrinsic PM-1 and a second PM ("SAC PM-1") had received and 

then traded based on an advance tip from an outside health care 

analyst (the "Health Care Analyst") at a research firm doing 

business with the SAC ENTITY DEFENDANTS. In particular, 

evidence reviewed by the SAC compliance department reflected 

that on the evening of July 27, 2009, the Health Care Analyst 

25 



communicated to CR Intrinsic PM-1 that his firm would publicly 

release a negative research report the next day about health 

care company Medicisr Inc. ("Medicis 11
). CR Intrinsic PM-1 then 

told this to the research analyst for SAC PM-1. SAC PM-1 1 S 

research analyst then admitted - as corroborated by e-mails and 

phone records - that he had 1 at SAC PM-1 1 S direction/ called the 

Health Care Analyst and learned that the negative research 

report would be publicly released in the "pm 11 of July 28 1 2009. 

Both CR Intrinsic PM-1 and SAC PM-1 shorted the stock of Medicis 

before the report was released that evening. Despite thisr and 

despite the fact that it was the SAC Owner who had initially 

inquired about the trading/ the consequences were limited. The 

SAC ENTITY DEFENDANTS imposed monetary fines on the two 

offenders 1 but allowed them to keep their jobs/ and failed to 

report the insider trading to any regulatory or law enforcement 

personnel. 

Examples Of Insider Trading By Agents Of Each Of The 
SAC ENTITY DEFENDANTS 

30. In connection with the scheme described above/ 

SAC CAPITAL LPr SAC CAPITAL LLC 1 CR INTRINSIC and SIGMA CAPITAL 1 

the defendants/ through the conduct of their agents/ sought to 

obtain and trade upon Inside Information on multiple occasions 

26 



between 1999 and at least 2010. This trading includes -but is 

not limited to - the conduct described below. 

Insider Trading By Agents Of CR INTRINSIC 

31. Agents of CR INTRINSIC, the defendant, obtained 

and traded upon Inside Information on multiple occasions, 

including but not limited to the examples described below: 

a. Trading By Martoma And The SAC Owner In Elan And 

Wyeth. As of mid-July 2008, the SAC Hedge Fund's largest equity 

securities position consisted of over $700 million worth of Elan 

American Depository Receipts ("ADRs") and Wyeth common stock. 

The SAC Owner had accumulated the position in large part on the 

recommendation of Martoma. On or about July 17, 2008, Martoma 

obtained negative Inside Information from a medical doctor 

involved in the Drug Trial being conducted by Elan and Wyeth. 

On or about Saturday, July 19, 2008, Martoma met with the doctor 

in person in Michigan. On or about the morning of Sunday, July 

20, 2008, Martoma spoke by telephone to the SAC Owner, who the 

next day began selling the entire $700 million position and 

shorting approximately $260 million worth of Elan and Wyeth 

stock prior to the public announcement of the Drug Trial results 

on or about July 29, 2008. The SAC Hedge Fund's profits and 

27 



avoided losses from this illegal insider trading amounted to 

approximately $276 million. 

b. Trading By Two SAC PMs And The SAC Owner Based On 

Information From CR Intrinsic RA-1. On various occasions in 

2008 and 2009, a technology sector research analyst for CR 

Intrinsic ("CR Intrinsic RA-1") obtained Inside Information from 

contacts at various technology companies, including earnings 

information from Dell (from the same source who provided Inside 

Information to Horvath) and acquisition-related information from 

Foundry Networks Inc. ("Foundry"). The two SAC PMs to whom CR 

Intrinsic RA-1 reported and the SAC Owner all placed profitable 

trades on one or more occasions shortly after recommendations 

made on the basis of Inside Information known to CR Intrinsic 

RA-1. 

Insider Trading By Agents Of SIGMA CAPITAL 

32. Agents of SIGMA CAPITAL, the defendant, obtained 

and traded upon Inside Information on multiple occasions, 

including but not limited to the examples described below: 

a. Trading By Steinberg And The SAC Owner Based On 

Information From Horvath. On or about August 18, 2008, Horvath 

learned from a contact in his network that an insider at Dell 

had disclosed that Dell's earnings would be below market 

28 



expectations and provided that information to Steinberg, who 

immediately began shorting shares of Dell stock in Steinberg's 

portfolio. On or about August 26, 2008 at 12:37 p.m., Steinberg 

e-mailed Horvath that he had been "talking to [the SAC Owner] 

about Dell earlier today" and that the SAC Owner wanted Horvath 

to "compare notes" with a different SAC PM who had taken a 

contrary, bullish position on Dell. At approximately 1:09 p.m., 

Horvath responded to Steinberg and the bullish SAC PM by e-mail: 

G 
"I have a 2nd hand read from someone at the company - this is 

3rd quarter I have gotten this read from them and it has been 

very good in the last two quarters. Please keep to 

yourselves as obviously not well known." The e-mail further 

reported that the gross margin for Dell would fall short by "50-

80 bps [basis points]." The bullish SAC PM then forwarded the 

Horvath e-mail to a "research trader" for the SAC Owner who 

assisted the SAC Owner in trading technology stocks. The 

research trader, in turn, forwarded Horvath's e-mail directly to 

the SAC Owner at approximately 1:29 p.m. and spoke by phone to 

the SAC Owner at 1:37 p.m. for approximately one minute. At 

approximately 1:39 p.m., the SAC Owner began selling Dell shares 

in his own portfolio, closing out his entire approximately $12.5 

million position prior to the disappointing earnings 

29 



announcement, avoiding losses of approximately $1.7 million. On 

or about August 28, 2008, after Dell had publicly announced 

earnings that, consistent with Horvath's Inside Information, 

were below market expectations, the SAC Owner e-mailed 

Steinberg's group, including Horvath: "Nice job on dell." 

b. Trading By Sigma PM-1 Based On Inside Information 

From Wang. Between approximately 2002 and 2005, in connection 

with his employment as a SAC RA, Wang recommended trades to 

Sigma PM-1 based on Inside Information that Wang obtained from a 

network of contacts at publicly-traded technology companies, 

including but not limited to TSMC, Cisco, Broadcom, eBay, 

Cypress, Polycom, QLogic and Cirrus. 

c. Trading Based On Inside Information From CB Lee. 

Between approximately 2008 and 2009, former SIGMA CAPITAL PM CB 

Lee, who by then was operating his own hedge fund, recommended 

trades based on Inside Information to Sigma PM-1. The Inside 

Information involved various technology sector stocks, including 

Dell and NVIDIA. For example, in a recorded call on or about 

January 16, 2009, CB Lee told Sigma PM-1, "between you and me," 

that "a friend of my cousin" who "works for Dell finance," is 

"telling me to avoid the stock for Q2, because Q2 is gonna be 

horrible." In a follow-up recorded call on or about January 23, 

30 



2009, CB Lee reiterated to Sigma PM-1 that "I do have a contact 

at Dell, he's in finance" and that the contact was reporting 

that the "April quarter could see a problem with gross margins" 

because sales to businesses were "very weak and that's where 

most of the profitability is." 

Insider Trading By Agents Of SAC CAPITAL LP 

33. Agents of SAC CAPITAL LP, the defendant, obtained 

and traded upon Inside Information on multiple occasions, 

including but not limited to the examples described below: 

a. Trading By Richard Lee. On various 

occasions between approximately April 2009 through approximately 

2010, Richard Lee - who had been hired by SAC CAPITAL LP despite 

a warning to the SAC Owner that he had been part of an "insider 

trading group" at a prior employer - traded on Inside 

Information in the $1.25 billion "special situations" SAC 

portfolio Richard Lee jointly managed with a second SAC PM. For 

example, Richard Lee obtained, from a contact at a private 

equity firm with a stake in Yahoo, both early access to a Yahoo 

earnings report and information relating to a contemplated 

partnership with Microsoft, the latter of which ultimately took 

place in or around July 2009. Richard Lee - as well as other 

SAC PMs - also spoke to a technology analyst (the "Tech 

31 . 



Analyst") from a research firm doing business with the SAC Hedge 

Funds about the potential Yahoo-Microsoft partnership. In a 

recorded call with Richard Lee on or about July 10, 2009, the 

Tech Analyst told Richard Lee that his "buddy," a "senior guy at 

Microsoft" who had been "very, very accurate in the past," told 

the Tech Analyst that a "senior team from Yahoo" had arrived at 

Microsoft to meet "the two senior-most people in [the] Microsoft 

internet business" to restart deal talks. 

Insider Trading By Agents Of Multiple SAC ENTITY DEFENDANTS, 
Including SAC CAPITAL LLC and SAC CAPITAL LP 

34. In some cases, such as the examples described 

herein, instances of insider trading involved agents of multiple 

SAC ENTITY DEFENDANTS either because different employees 

involved in the trading worked for different SAC management 

companies or because the employees switched between management 

companies during the course of their employment. Examples of 

such trading include but are not limited to the following: 

a. Trading.At SAC CAPITAL LLC And SIGMA CAPITAL 

Based On Inside Information From CB Lee. In connection with his 

employment as a SAC RA at SAC CAPITAL LLC and then SIGMA 

CAPITAL, CB Lee sought and obtained Inside Information through 

direct and indirect contacts at various technology companies 

between approximately 1999 and 2004, including but not limited 

32 



to Intel, AMD, and Altera. CB Lee then recommended trades based 

on this Inside Information to the portfolio manager to whom he 

reported and in some instances to the SAC Owner directly. In 

these trading recommendations, CB Lee typically described the 

source of the information as being from "my guy," "my contact," 

or "my check" "at" the company in question. 

b. Trading At SAC CAPITAL LLC, SAC CAPITAL LP And 

CR INTRINSIC Based On Inside Information From Freeman And 

Longueuil. In connection with their employment, Freeman 

(employed first by SAC CAPITAL LLC and then SAC CAPITAL LP) and 

Longueuil (employed by CR INTRINSIC) obtained and traded on 

Inside Information between approximately 2008 and 2010 in a 

vari~ty of technology companies, including but not limited to 

RIMM, NVIDIA, Marvell, Avnet, Fairchild, Atheros, Broadcom and 

Dell. 

Statutory Allegations 

35. At various times from in or about 1999, through 

at least in or about 2010, in the Southern District of New York 

and elsewhere, SAC CAPITAL LP, SAC CAPITAL LLC, CR INTRINSIC, 

and SIGMA CAPITAL, the defendants, willfully and knowingly, 

having devised and intending to devise a scheme and artifice to 

defraud, and for obtaining money and property by means of false 

33 



and fraudulent pretenses, representations and promises, did 

transmit and cause to be transmitted by means of wire, radio and 

television communication in interstate and foreign commerce, 

writings, signs, signals, pictures, and sounds for the purpose 

of executing such scheme and artifice, to wit, SAC ENTITY 

DEFENDANT employees and agents obtained by telephone, e-mail and 

other electronic forms of interstate communication, while 

located in SAC ENTITY DEFENDANT offices in Manhattan, New York 

and elsewhere, Inside Information concerning various public 

company stocks, some of which were publicly-traded on a stock 

exchange in Manhattan, New York, for the purpose of executing 

securities transactions based in whole or in part on that Inside 

Information. 

(Title 18, United States Code, Sections 1343 and 2.) 

COUNT TWO 

(Securities Fraud: SAC CAPITAL LP) 

The Grand Jury further charges: 

36. The allegations contained in paragraphs 1 through 

34 are repeated and realleged as though fully set forth herein. 

37. From in or about 2009, up through and including 

at least in or about 2010, in the Southern District of New York 

and elsewhere, SAC CAPITAL LP, the defendant, willfully and 

34 



knowingly, directly and indirectly, by the use of means and 

instrumentalities of interstate commerce, the mails and the 

facilities of national securities exchanges, in connection with 

the purchase and sale of securities, did use and employ 

manipulative and deceptive devices and contrivances, in 

violation of Title 17, Code of Federal Regulations, Section 

240.10b-5, by (a) employing devices, schemes and artifices to 

defraud; (b) making untrue statements of material facts and 

omitting to state material facts necessary in order to make the 

statements made, in light of the circumstances under which they 

were made, not misleading; and (c) engaging in acts, practices 

and courses of business which operated and would operate as a 

fraud and deceit upon persons, to wit, SAC CAPITAL LP, through 

its employees and agents, engaged in a scheme to obtain and 

trade upon Inside Information. 

(Title 15, United States Code, Sections 78j (b) & 78ff; 
Title 17, Code of Federal Regulations, Section 240.10b-5 & 
240.10b5-2; and Title 18, United States Code, Section 2.) 

COUNT THREE 

(Securities Fraud: SAC CAPITAL LLC) 

The Grand Jury further charges: 

38. The allegations contained in paragraphs 1 through 

34 are repeated and realleged as though fully set forth herein. 

35 



39. From in or about 1999, up through and including 

2008, in the Southern District of New York and elsewhere, SAC 

CAPITAL LLC, the defendant, willfully and knowingly, directly 

and indirectly, by the use of means and instrumentalities of 

interstate commerce, the mails and the facilities of national 

securities exchanges, in connection with the purchase and sale 

of securities, did use and employ manipulative and deceptive 

devices and contrivances, in violation of Title 17, Code of 

Federal Regulations, Section 240.10b-5, by (a) employing 

devices, schemes and artifices to defraud; (b) making untrue 

statements of material facts and omitting to state material 

facts necessary in order to make the statements made, in light 

of the circumstances under which they were made, not misleading; 

and (c) engaging in actsr practices and courses of business 

which operated and would operate as a fraud and deceit upon 

persons, to wit, SAC CAPITAL LLC, through its employees and 

agents, engaged in a scheme to obtain and trade upon Inside 

Information. 

(Title 15 1 United States Code, Sections 78j (b) & 78ff; 
Title 17, Code of Federal Regulations, Section 240.10b-5 & 
240.10b5-2; and Title 18, United States Code, Section 2.) 

36 



COUNT FOUR 

(Securities Fraud: CR INTRINSIC) 

The Grand Jury further charges: 

40. The allegations contained in paragraphs 1 through 

34 are repeated and realleged as though fully set forth herein. 

41. From in or about 2006 up through and including at 

least in or about 2009, in the Southern District of New York and 

elsewhere, CR INTRINSIC, the defendant, willfully and knowingly, 

directly and indirectly, by the use of means and 

instrumentalities of interstate commerce, the mails and the 

facilities of national securities exchanges, in connection with 

the purchase and sale of securities, did use and employ 

manipulative and deceptive devices and contrivances, in 

violation of Title 17, Code of Federal Regulations, Section 

240.10b-5, by (a) employing devices, schemes and artifices to 

defraud; (b) making untrue statements of material facts and 

omitting to state material facts necessary in order to make the 

statements made, in light of the circumstances under which they 

were made, not misleading; and (c) engaging in acts, practices 

and courses of business which operated and would operate as a 

fraud and deceit upon persons, to wit, CR INTRINSIC, through its 

employees and agents, engaged in a scheme to obtain and trade 

37 



upon Inside Information. 

(Title 15, United States Code, Sections 78j (b) & 78ff; 
Title 17, Code of Federal Regulations, Section 240.10b-5 & 
240.10b5-2; and Title 18, United States Code, Section 2.) 

COUNT FIVE 

(Securities Fraud: SIGMA CAPITAL) 

The Grand Jury further charges: 

42. The allegations contained in paragraphs 1 through 

34 are repeated and realleged as though fully set forth herein. 

43. From in or about 2002, up through and including 

at least in or about 2009, in the Southern District of New York 

and elsewhere, SIGMA CAPITAL, the defendant, willfully and 

knowingly, directly and indirectly, by the use of means and 

instrumentalities of interstate commerce, the mails and the 

facilities of national securities exchanges, in connection with 

the purchase and sale of securities, did use and employ 

manipulative and deceptive devices and contrivances, in 

violation of Title 17, Code of Federal Regulations, Section 

240.10b-5, by (a) employing devices, schemes and artifices to 

defraud; (b) making untrue statements of material facts and 

omitting to state material facts necessary in order to make the 

statements made, in light of the circumstances under which they 

were made, not misleading; and (c) engaging in acts, practices 

38 



and courses of business which operated and would operate as a 

fraud and deceit upon persons, to wit, SIGMA CAPITAL, through 

its employees and agents, engaged in a scheme to obtain and 

trade upon Inside Information. 

(Title 15, United States Code, Sections 78j (b) & 78ffi 
Title 17, Code of Federal Regulations, Section 240.10b-5 & 
240.10b5-2i and Title 18, United States Code, Section 2.) 

FORFEITURE ALLEGATION 

44. As a result of committing the offenses alleged in 

Counts One through Five of this Indictment, the SAC ENTITY 

DEFENDANTS shall forfeit to the United States, pursuant to Title 

18, United States Code, Section 981(a) (1) (C), and Title 28, 

United States Code, Section 2461, all property, real and 

personal, which constitutes or is derived from proceeds 

traceable to the commission of those offenses. 

Substitute Assets Provision 

45. If any of the above-described forfeitable 

property, as a result of any act or omission of the defendants: 

a. cannot be located upon the exercise of due 

diligencei 

b. has been transferred or sold to, or 

deposited with, a third partyi 

39 



c . has been placed beyond the jurisdiction of 

the court; 

d . has been substantially diminished in value; 

or 

e . has been commingl ed with other property 

which cannot be divided without difficulty; 

it is the intent of the United States, pursuant to Title 21, 

United States Code, Section 853(p), to seek forfeiture of any 

other property of said defendant up to the value of the 

f orfeitable propert y described above. 

(Title 18, United States Code, Section 981; Title 21, United 
States, Section 853(p); Title 28, United States Code, 

Section 2461.} 

PREET BHARARA 
United States Attorney 

40Form No . USA- 33s - 274 (Ed. 9-25-58) 

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

UNITED STATES OF AMERICA 

- v. -

S.A.C . CAPITAL ADVISORS, L .P . , 
S.A.C . CAPITAL ADVISORS, LLC, 

CR INTRINSIC INVESTORS, LLC , and 
SIGMA CAPITAL MANAGEMENT, LLC , 

Defendants. 

INDICTMENT 

13 Cr . 

(18 u . s .c. §§ 2, 1343; Title 15, United 
States Code, Sections 78j (b) & 78ff; 

Title 17, Code of Federal Regulations, 
Se ction 240. 10b-5) 

PREET BHARARA 
United States Attorney.