Billionaire Steven A. Cohen can face questions about insider trading at his hedge fund SAC Capital Advisors from lawyers representing his ex-wife in a civil lawsuit against him, a U.S. judge said on Monday.
U.S. District Judge Loretta Preska at a court hearing in Manhattan ruled that lawyers for Patricia Cohen can ask Steven Cohen during a Dec. 10 deposition about any "prior bad acts that are alleged to be untruthful," including any alleged role he had in fraudulent schemes.
But the judge denied Patricia Cohen's bid for so-called Wells notices sent to Cohen by the U.S. Securities and Exchange Commission and any responses he provided. The notices are issued to potential targets when the SEC has determined there is sufficient wrongdoing to justify a civil claim.
"The request for the documents is related to issues that are far afield in both time and substance," she said.
Preska's decision to allow broad questioning came despite a warning from Steven Cohen's lawyer, Martin Klotz, that it would create a "three-ring circus" with questions that had nothing to do with the underlying decades-old dispute.
Cohen has not been criminally charged, although the SEC is seeking to bar him from the securities industry for failing to supervise employees engaged in insider trading. He denies wrongdoing.
The fight with his ex-wife began in 1991, when Patricia Cohen requested additional child support.
The current lawsuit, filed in 2009, stems from a $9 million real estate deal that soured. Patricia Cohen claims Steven Cohen recovered $5.5 million of the money in secret and hid it from her using sham transactions during divorce proceedings.
Eight SAC Capital employees have been convicted at trial or pleaded guilty to insider trading.
SAC Capital agreed last year to pay $1.8 billion in criminal and civil settlements and plead guilty to fraud charges. It has since changed its name to Point72 Asset Management and transformed into a family office devoted to managing Cohen's fortune.
The case is Cohen v. Cohen, U.S. District Court for the Southern District of New York, No. 09-10230.
