Sac Filing Real

7/27/2019 Sac Filing Real

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UNITED STATES DISTRICT COURTSOUTHERN 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, andSIGMA CAPITAL MANAGEMENT, LLC,

Defendants .

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- - - - - - - - - - - - - - - - - XCOUNT ONE

(Wire Fraud)The Grand Jury charges:

SEALEDINDICTMENT

1. As descr ibed below, t h i s Indictment charges thecorpora te e n t i t i e s respons ib le fo r the management of a majorhedge fund with c r imina l r e s pons ib i l i t y fo r i n s ide r t r ad ingof fenses committed by numerous employees and made poss ib le byi n s t i t u t i o n a l prac t ices tha t encouraged the widespreads o l i c i t a t i o n and use of i l l e g a l in s ide in format ion . Unlawfulconduct by ind iv idua l employees and an i n s t i t u t i o n a li nd i f fe rence to t ha t unlawful conduct resu l t ed in i n s ide rt r ad ing t ha t was subs tan t ia l , pervas ive and on a sca le withoutknown precedent in the hedge fund indus t ry .

The SAC Capi ta l Ent i t i es2. At a l l t imes r e levan t to t h i s Indictment , an

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ind iv idua l res id ing in Greenwich, Connect icut ( the "SAC Owner")


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opera ted a group of a f f i l i a t e d hedge funds (co l l ec t ive ly , the"SAC Hedge Fund" o r "SAC"). The SAC Hedge Fund, founded by theSAC Owner in or around 1992, included, a t i t s peak, over $15b i l l i o n of asse t s under management. The major i ty of the c a p i t a lmanaged by the SAC Hedge Fund a t a l l r e levan t t imes belonged tothe SAC Owner himse l f , with the balance of c a p i t a l provided byouts ide i nves to rs .

3. The SAC Owner opera ted the SAC Hedge Fund throughh is ownership of severa l fund management companies, which servedas investment advisors fo r the SAC Hedge Fund. These managementcompanies genera l ly charged outs ide inves to r s in the SAC HedgeFund annual fees of approximately th ree percent of asse t s undermanagement and up to 50 percent of investment re tu rns . Thepr inc ipa l management companies were as fol lows: (i) CR INTRINSICINVESTORS, LLC ("CR INTRINSIC"), a Delaware l imi ted l i a b i l i t ycompany; ( i i ) SIGMA CAPITAL MANAGEMENT, LLC ("SIGMA CAPITAL"), aDelaware l imi t ed l i a b i l i t y company; ( i i i ) S.A.C. CAPITALADVISORS, LLC ("SAC CAPITAL LLC"), a Delaware l imi ted l i ab i l i t ycompany t ha t a c t i ve ly managed investments in the SAC Hedge Fundthrough approximately 2008; and (iv) S.A.C. CAPITAL ADVISORS,L.P. ("SAC CAPITAL LP") a Delaware l imi ted par tne r sh ip t ha tac t ive ly managed inves tments in the SAC Hedge Fund beginning in

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approximate ly 2009 (co l l ec t ive ly , the "SAC ENTITY DEFENDANTS").Overview of The Scheme

4. At va r ious t imes between in o r about 1999 througha t l e a s t in or about 2010, employees and agents of SAC CAPITALLP, SAC CAPITAL LLC, CR INTRINSIC, and SIGMA CAPITAL, thedefendants , obta ined mater i a l , non-public informat ion ("InsideInformation") r e l a t i ng to pub l ic ly - t r aded companies and t radedon t h a t Ins ide Informat ion in orde r to (i) increase the re turnon investment in th e SAC Hedge Fund; and ( i i ) increase feesrece ived by the SAC ENTITY DEFENDANTS.

5. The SAC ENTITY DEFENDANTS committed the i n s ide rt rad ing scheme through the ac ts o f, among o ther s , numerouspor t fo l i o managers ("SAC PMs") and research ana lys t s ("SAC RAs")who engaged in a pa t t e rn of obta in ing Ins ide Informat ion fromdozens of pub l i c ly - t raded companies across mult ip le indus t rysec tors . Employees of the SAC ENTITY DEFENDANTS t raded onIns ide Informat ion themselves and, a t t imes, recommended t radesto the SAC Owner based on Ins ide Information.

6. The SAC ENTITY DEFENDANTS enabled and promotedthe Ins ide r Trading scheme through severa l means de ta i ledhere in . F i r s t , the SAC ENTITY DEFENDANTS sought to h i r e SAC PMsand SAC RAs with proven access to publ ic company contacts l ike ly

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to possess Ins ide Informat ion. Secondr the SAC ENTITYDEFENDANTS/ employees were f inanc ia l ly incen t iv ized to recommendto th e SAC Owner "high c o n v i c t i o n ~ ~ t r ad ing ideas in which theSAC PM had an "edger over o ther inves to r s / but repea tedly wereno t ques t ioned when making t r ad ing recommendations t ha t appearedto be based on Ins ide Informat ion. Third 1 on numerous occas ionsthe SAC ENTITY DEFENDANTS fa i l ed to employ e f fec t ive complianceprocedures o r prac t ices to prevent SAC PMs and SAC RAs fromengaging i n i n s ide r t r ad ing .

7. At bottom 1 th e encouragement by the SAC ENTITYDEFENDANTS of SAC PMs and SAC RAs to pursue aggress ively anin format ion "edge 11 overwhelmed l imi ted SAC compliance systems.Further 1 the r e l en t l e s s pursu i t of an informat ion "edge 11fos tered a business cul ture within SAC in which there was nomeaningful commitment to ensure t ha t such "edge 11 came froml eg i t imate r esea rch and not Ins ide Informat ion . The predic tab leand foreseeable r e s u l t 1 as charged herein 1 was systemat icins ide r t rad ing by the SAC ENTITY DEFENDANTS re su l t ing inhundreds of mil l ions of dol la r s of i l l e g a l pro f i t s and avoidedlosses a t the expense of members of the inves t ing pub l ic .

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The Operation Of The SAC Hedge Fund8. The SAC Hedge Fund funct ioned as a co l l ec t ion of

dozens of ind iv idua l por t fo l ios , each headed by a por t fo l iomanager re spons ib l e fo r h is o r her p o r t f o l i o ' s p ro f i t - a n d - l o s sr e s u l t s , and each charged with shar ing the bes t t r ad ing ideaswith th e SAC Owner d i rec t l y .

9. In pa r t i c u l a r , th e SAC Owner a l loca ted investmentcap i t a l between and among up to approximately 100 i n t e rn a lpor t fo l ios , each of which was genera l ly managed by a SAC PM whospec ia l i zed in a p a r t i c u l a r investment sec to r , such astechnology , hea l th care , f inanc ia l s e rv ices , i ndus t r i a l ,consumer, o r energy. Each por t fo l io manager, in t u rn , typ ica l lyemployed one o r more re sea rch analys ts to a s s i s t with thedevelopment of investment ideas fo r the SAC PM's por t fo l io .

10. The SAC Hedge Fund por t fo l ios were in many waysautonomous from each o ther . Each SAC PM had su b s t a n t i a ldisc re t ion to make inves tment dec is ions i n h i s or her por t fo l io ,even i f a pos i t ion was contrary to a pos i t ion taken by o ther SACPMs ope ra t ing a p o r t f o l i o in the same se c t o r . Each SAC PM wascompensated pr inc ipa l ly based on the performance of h is o r herown por t fo l io , and without regard to the investment performanceof o ther SAC PMs. Likewise , SAC RAs were compensated l a rge ly a t

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the disc re t ion of the SAC PM to whom the SAC RA repor ted andbased on th e p r o f i t a b i l i t y of t ha t PM's por t fo l io .

11. The l a rge s t po r t fo l i o in exis tence a t the SACHedge Fund was, a t a l l r e levan t t imes, a por t fo l io managed bythe SAC Owner himse l f . The SAC Owner had so le t r ad ingd i s c r e t i on over h is por t fo l io and made these dec is ionspr inc ipa l ly based on t rad ing recommendations from SAC PMs. Inpar t i cu l a r , a t a l l r e levan t t imes the SAC Owner requ i red eachSAC PM to share "high convic t ion" investment i d e a s - i . e . , theinves tment recommendations in which the SAC PM had th e g re a t e s tconfidence - with th e SAC Owner. In fac t , prov id ing such ideasto th e SAC Owner was an express pa r t of a SAC PM's du t ies andwas emphasized to SAC PMs in th e h i r ing process and once workinga t SAC.

12. In orde r to f a c i l i t a t e th e col lec t ion of topt rad ing ideas from the SAC PMs, the SAC ENTITY DEFENDANTSemployed d i f f e r e n t systems a t var ious t imes, inc luding, forexample, a t empla te f i l l e d ou t on SAC's computer system anddes igna ted voicemai l and e-mai l boxes to co l l ec t t r ad ing ideas .In add i t ion to these formal systems, the SAC Owner communicatedwith SAC PMs regu la r ly through var ious means to a sc e r t a i n t he i rbes t t r ad ing ideas , inc luding during semi-regula r Sunday evening

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ca l l s and in-person conversa t ions . To a s s i s t in process ing SACPM ideas , the SAC Owner a t t imes employed sec tor- focused"research t r ader s " who, among othe r th ings , ensured t h a t theideas of SAC PMs in th e s ec to r were brought to the SAC Owner 'sa t t e n t ion and moni tored the t r ad ing of the SAC PMs to ensuret ha t th e t rad ing was co n s i s t en t with recommendations made to theSAC Owner.

13. At a l l r e levan t t imes, the SAC ENTITY DEFENDANTSformal ly t r acked t r ades made by th e SAC Owner in th e por t fo l iohe persona l ly managed in orde r to "tag" o r c re d i t th e SAC PMrespons ib le fo r th e idea . At a l l r e levan t t imes , th e SAC ENTITYDEFENDANTS pa id SAC PMs an annual bonus - which could in somecases exceed a l l othe r components of compensation - based on apercentage of the ne t pro f i t s made by the SAC Owner on t r ades"tagged" to a par t i cu l a r SAC PM.SAC PMs and SAC RAs Who Obtained Or Traded On Ins ide Information

While Employed By The SAC ENTITY DEFENDANTS14. Numerous SAC PMs and SAC RAs, no t a l l of whom

a re i de n t i f i e d he re in , obta ined or t raded on Ins ide In format ionwhile employed by one o r more of the SAC ENTITY DEFENDANTS.Each of th e e i g h t ind iv idua l SAC PMs o r SAC RAs i de n t i f i e d byname below have been charged with and /or convicted of t rad ing onIns ide In fo rmat ion in connec t ion with one o r more of th e SAC

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ENTITY DEFENDANTS:a . Wes Wang ("Wang") was a SACRA spec ia l i z ing

in th e technology se c t o r employed by SIGMA CAPITAL fromapproximate ly 2002 to 2005. While se rving as a SACRA, Wangobta ined Ins ide Informat ion with respect to var ious technologycompanies, inc luding but not l imi ted to Taiwan SemiconductorManufactur ing Company Limited ("TSMC"), Cisco Systems, Inc.("Cisco") , Broadcom Corporat ion ("Broadcom"), eBay, Inc .( "eBay") , Cypress Semiconductor Corporat ion ("Cypress") ,Polycom, Inc. ("Polycom"), QLogic Corporat ion ("QLogic") andCir rus Logic Inc . ("Cir rus" ) . Wang provided t rad ing ideas basedon Ins ide Informat ion to the por t fo l io manager to whom her epor ted ("Sigma PM-1"). On or about July 13, 2012, Wang pledgu i l t y in f edera l cour t to tw o counts of conspiracy to commitsecu r i t i e s fraud, one of which involved i n s ide r t rad ing inconnect ion with Wang's employment a t SIGMA CAPITAL from 2002 to2005. At h is gu i l t y p lea , Wang admit ted t ha t , while a t SIGMACAPITAL, he had obta ined Ins ide Informat ion and provided it toSigma PM-1 to be used fo r the purchase and sa le of secu r i t i e s .

b. Richard Choo-Beng Lee ("CB Lee") was a SACRAspec ia l i z ing in the technology sec to r employed by SAC CAPITALLLC from approximate ly 1999 to 2003 and by SIGMA CAPITAL from

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approx imate ly 2003 to 2004. While se rving as a SACRA, CB Leeobta ined Ins ide Informat ion with re spec t to var ious technologycompanies, inc luding bu t not l imi ted to I n t e l Corporat ion( " In te l " ) , Advance Micro Devices , Inc . ( "AMD") , and Al t e r aCorpora t ion ("Al tera" ) . CB Lee provided t r ad ing ideas based onIns ide Informat ion to the por t fo l io manager to whom he repor tedand the SAC Owner. On o r about October 13, 2009, CB Lee pledgu i l t y i n f edera l cour t to , among o ther t h ings , conspi racy tocommit s e c u r i t i e s f raud and wire f raud r e l a t i ng to t radingrecommendations based on Ins ide Information t h a t CB Lee hadprovided to Sigma PM-1 and o ther s fo l lowing CB Lee ' s depar turefrom SIGMA CAPITAL. At h is gui l ty p lea , CB Lee admit ted t ha t heobta ined Ins ide Informat ion and t ha t he purchased and soldsecu r i t i e s based in p a r t on such Ins ide Informat ion .

c . Jon Horvath was a SACRA spec ia l i z ing in thetechnology se c t o r employed by SIGMA CAPITAL from approximately2006 through 2011. Horvath served as a research ana lys t fo rpor t fo l io manager Michael Ste inberg , who has been employed bySIGMA CAPITAL from approximately 2003 to the presen t , and as apor t fo l io manager fo r SAC CAPITAL LLC from approximately 1996 to2003. On o r abou t September 28, 2012, Horvath pled gu i l t y inf edera l cour t to conspiracy and s e c ur i t i e s f raud fo r i n s ide r

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t r ad ing Horvath committed while a t SIGMA CAPITAL, inc luding butno t l imi ted to i n s i d e r t rad ing in r e l a t i on to Del l Inc . ("Dell")in August 2008 and NVIDIA Corporat ion ("NVIDIA") in May 2009.Horvath admi t t ed a t h is gu i l t y plea t ha t he obta ined Ins ideInformat ion about Del l and NVIDIA and provided the Ins ideInformat ion to Ste inberg , who executed t rades in these s tocksbased on t h a t in fo rmat ion . On or about March 28, 2013, a grandj u ry in th e Southern D i s t r i c t of New York re turned an indic tmentcharging Ste inberg with i n s i d e r t r ad ing a t SIGMA CAPITAL.

d. Noah Freeman was a SAC PM spec ia l i z ing in thetechnology se c t o r who was employed by SAC CAPITAL LLC inapprox imate ly 2008 and by SAC CAPITAL LP from approximately 2009to ea r ly 2010. While se rving as a por t fo l io manager, NoahFreeman obta ined and/or t raded on Ins ide Informat ion fromvar ious technology companies, inc luding but no t l imi ted to ,Research in Motion, Ltd. ("RIMM"), NVIDIA, Marvel l TechnologyGroup, Ltd. ("Marvell") , Avnet, Inc . ( "Avnet") , Fai rch i ldSemiconductor ( "Fa i rch i ld" ) , Atheros Communications, Inc .("Atheros") , Broadcom and Del l . On o r about February 7, 2011,

Noah Freeman p led gu i l t y in fede ra l cour t to , among othe rth ings , consp i racy and s e c ur i t i e s f raud fo r i n s i d e r t rad ing hecommitted while employed by SAC CAPITAL LLC and SAC CAPITAL LP.

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At h is gu i l t y p lea , Freeman admit ted t h a t he obta ined Ins ideInformation, and t h a t he purchased and sold secu r i t i e s based inp a r t on such Ins ide Information in connect ion with h isemployment a t SAC CAPITAL LLC and SAC CAPITAL LP.

e . Donald Longueuil was a SAC PM spec ia l i z ing in thetechnology se c t o r who was employed by CR INTRINSIC fromapproximately 2008 through 2010. While se rving as a por t fo l iomanager, Longueui l obtained and/or t raded on Ins ide Informationfrom var ious technology companies, inc luding but not l imi ted to ,RIMM, NVIDIA, Marvel l , Avnet, Fai rch i ld , Atheros, Broadcom andDel l . On o r about Apr i l 28, 2011, Longueuil pled gu i l t y inf edera l cour t to , among o ther th ings , conspiracy and s e c ur i t i e sf raud fo r i n s ide r t r ad ing he committed while employed by CRINTRINSIC. At h is gu i l t y p lea , Longueuil admit ted t ha t , whilehe was employed by CR INTRINSIC, he received Ins ide Informationfo r the purpose of t r ad ing on t h a t informat ion a t CR INTRINSIC.

f . Mathew Martoma was a SAC PM spec ia l i z ing in thehea l th care s e c to r employed by CR INTRINSIC from approximately2006 to 2010. On o r about December 21, 2012, a grand ju ry inth e Southern D i s t r i c t of New York re turned an indic tmentcharging Martoma with i n s i d e r t r ad ing a t CR INTRINSIC r e l a t i ngto shares of Elan Corporat ion, p lc ("Elan") and Wyeth.

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g. Richard Lee was a SAC PM employed by SAC CAPITALLP between approximate ly Apri l 2009 and June 2011, and againbetween approximate ly September 2012 and March 2013, who focusedon " spec ia l s i tua t ions" across indus t ry sec to rs such as mergers ,acqu i s i t ions , p r iva te equi ty buy-outs and corpora ter e s t ruc tu r ings . While se rving as a SAC PM, Richard Lee obtainedIns ide In format ion with respect to var ious secu r i t i e s , inc ludingbut no t l imi ted to , Yahoo! Inc. ("Yahoo") and 3Com Corporat ion("3COM"). On o r about July 23, 2013, Richard Lee pled gu i l t y inf edera l cour t to an informat ion charging Lee with conspiracy andsecu r i t i e s f raud in connect ion with h is employment a t SACCAPITAL LP. At h is gu i l t y p lea , Richard Lee admit ted tha t heobta ined Ins ide Informat ion and t ha t he purchased and soldsecu r i t i e s based in pa r t on such Ins ide Informat ion inconnect ion wi th h is employment a t SAC CAPITAL LP.

The Fac i l i ta t ion Of The Scheme By Th e SAC ENTITY DEFENDANTS15. The i n s ide r t rad ing scheme committed by the SAC

ENTITY DEFENDANTS through the conduct of t h e i r agents wasf a c i l i t a t e d th rough prac t ices employed by the SAC ENTITYDEFENDANTS t ha t encouraged SAC PMs and SAC RAs to pursueindus t ry con tac t networks to obta in an in format ion "edge"unava i lable to o th e r investors , without e f fec t ive corresponding

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con t ro l s to preven t t h a t "edge" from cons i s t ing of Ins ideInformat ion. In pa r t i c u l a r , as descr ibed here in : (1) th e SACENTITY DEFENDANTS r o u t i n e ly sought to h i r e SAC PMs and SAC RAswith networks of contac ts l i ke ly to have access to Ins ideInformat ion; (2 ) SAC PMs and SAC RAs were requi red to sharet h e i r b es t investment ideas with the SAC Owner while ind ica t ionst h a t those ideas were based on Ins ide Information were of tenignored; and (3 ) th e SAC ENTITY DEFENDANTS fa i l ed to employ thenecessary compliance measures to de tec t o r preven t t r ad ing onIns ide Informat ion.The Hiring of SAC PMs and SAC RAs With Access To Ins ideInformat ion

16. In fur therance of th e scheme, th e SAC ENTITYDEFENDANTS sought to h i re PMs and RAs be l ieved by th e SAC Ownerand o ther s in SAC management to have an "edge" based i n p a r t onnetworks of con tac t s with employees of publ ic companies in thesec to r in which the SAC PM o r SAC RA spec ia l i zed . The focus onh i r ing employees with such networks was not ba lanced by anycorresponding e f f o r t to ensure t h a t prospec t ive SAC PMs and SACRAs did not use these contac ts to obta in i l l e g a l Ins ideInformat ion.

17. The f i r s t s tage of SAC's h i r ing process washandled by the SAC "bus iness development" depar tment , which

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sought to bu i ld r e l a t i o n s h ip s with and r e c ru i t SAC PMs and SACRAs. E-mai ls from the bus iness development team to the SAC

Owner and o ther s r e f l e c t e d an emphasis on h i r ing personnel withcompany con tac t s in t h e i r r espec t ive sec to r s . For example, ab r i e f wri te -up of a SAC PM candidate spec ia l i z ing in th ei n d u s t r i a l se c t o r forwarded to th e SAC Owner on o r aboutNovember 16, 2008, descr ibed the cand ida te as "the guy who knowsth e quar te r s co ld , has a share house in the Hamptons with theCFO of [a Fortune 100 i ndus t r i a l s ec to r company] , t i g h t withmanagement."

18. Afte r a SAC PM o r SACRA candidate wasp re l i m i n a r i l y approved fo r h i r ing , the SAC ENTITY DEFENDANTSsub jec t ed the cand ida te to a "due di l igence" process t ha tinvolved in te rv iewing th e cand ida te ' s re fe rences , p r i o remployers and o ther s , in p a r t to i den t i fy the s t r eng th of thecand ida te ' s indus t ry contac t networks. For example, the dued i l igence r epor t fo r Horvath - who obtained Ins ide Informationfrom company i n s i d e r s while employed a t SIGMA CAPITAL -i de n t i f i e d Horvath ' s "contac ts with companies" as a "keys t reng th" and noted t h a t Horvath genera ted investment ideas by"mining h is indus t ry contac t network fo r da tapo in t s . " Likewise ,th e due d i l i g en ce r ep o r t fo r Martoma - who i s charged with

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t rad ing based on Ins ide Information from doctors with access toco n f id en t i a l drug t r i a l da ta while employed a t CR INSTRINSIC -re fe r red to Martoma's hea l th care " indus t ry contac ts beyondmanagement[]" inc luding through tw o expe r t networking f i rms andMartoma's pe rsona l "network of docto rs in th e f i e ld . " There wasno re fe rence in th e due di l igence r epor t s fo r Horvath o r Martoma(or, gene ra l ly , fo r othe r candidates) to e th ics , i n t e g r i t y ,compliance o r whether th e candidate had o r was l i ke ly to use there fe renced con tac t s to obta in o r to make t r ades based on Ins ideInformat ion .

19. In fac t , on a t l ea s t one occas ion the SAC ENTITYDEFENDANTS h i red a candidate desp i te a recognized r epu ta t ion fo ri n s i d e r t r ad in g . In pa r t i c u l a r , in o r around the summer of2008, the SAC Owner rece ived a warning from an employee ofano ther hedge fund ("Hedge Fund A") t h a t Richard Lee, whoprev ious ly had worked a t Hedge Fund A, and was known fo r beingpa r t of Hedge Fund A 's " ins ide r t r ad ing group." A SAC businessdevelopment employee subsequently informed Richard Lee t h a t theSAC Owner had decided to h i re Richard Lee as a SAC PM anyway,ove r ru l ing ob jec t ions from SAC's l eg a l department . Richard Leethen proceeded to ob ta in and make t r ades based on Ins ide

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Informat ion shor t ly a f t e r s t a r t i ng h is employment a t SAC Capi ta lin approximately Apri l 2009.The Fai lu re By The SAC Owner And Others To Quest ion SAC TradingRecommendations Bearing Ind ic i a Of Being Based On Ins ideInformat ion

20. Further ing the scheme, the SAC Owner encouragedSAC PMs and SAC RAs, through f inanc ia l incen t ives and otherwise ,to share "high convic t ion" t rad ing ideas - inc luding ideasdeveloped through indus t ry contac ts - while of ten ignoringi nd ica t ions t ha t t r ad ing recommendations were based on Ins ideInformat ion.

21. In par t i cu l a r , on mult ip le occas ions SAC PMs andSAC RAs communicated to th e SAC Owner t r ad ing recommendationssourced to informat ion from a contac t "at" a publ ic company orwith s imi la r language. In these cases , the SAC Owner fa i l ed toinqu i re whether the con tac t was permi t ted to disc lose thecompany informat ion or to take other s teps to ensure t ha t thet r ade was not based on Ins ide Information. For example:

a . In an e-mai l dated June 11, 2008, a SAC PMemployed by CR INTRINSIC ("CR In t r i n s i c PM-1") wrote to the SACOwner t ha t "my guy a t [company name]" had expla ined why ce r ta inant ic ipa ted acqu i s i t ions had not occurred. In a second e-mail ,dated May 3, 2009, CR-Intr ins ic PM-1 wrote to the SAC Owner,

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re fe r r ing to the same company: " I am very comfor table t ha t t h i sq t r i s going to be so l id vs cur ren t consensus and guidance. Iam ge t t ing cof fee on tues af te rnoon with the guy who runs nor thAmerican gener ics bus iness ." The SAC Owner r ep l ied : "Le t ' s t a lkl a t e r . "

b. On o r about October 30, 2007, Horvath e-mai led at r ad ing recommendation concerning Sun Microsystems, Inc . ("Sun")to an e-mai l address used by the SAC Owner to rece ive investmentideas from SAC PMs and SAC RAs. Horvath wrote: "My edge i scon tac t s a t the company and t h e i r d i s t r i bu t ion channel ." TheSAC Owner d id not ask Horvath whether h is "contac ts a t thecompany" were permi t ted to share the informat ion t ha t hadprovided Horvath with h is "edge." Simi la r ly , on o r about August26, 2008, Horvath wrote an e-mai l to Ste inberg , which wasforwarded to the SAC Owner, s t a t i ng t ha t h is recommendation tos e l l Del l s tock in advance of a quar t e r ly earn ings announcementwas based on a "2nd hand read from someone a t the company" whohad "been very good in the l a s t two quar t e rs . " The SAC Ownerdid not ques t ion Horvath about h is contac t but did begin s e l l i ngo ff h is approximate ly $12.5 mil l ion Del l posi t ion approximately10 minutes a f t e r receiv ing the e -mai l .

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c. On or about February 26, 2007, Martoma i n i t i a t eda cha t with the SAC Owner v ia i n s t a n t message r e l a t i ng to a drug

approval announcement by a major pharmaceutical company ("PharmaCompany 1") t h a t had taken the f inanc ia l market by su rp r i se .Martomaadvised the SAC Owner t ha t Martoma had a " be t t e r edge"with re spec t to upcoming news about a second drug in developmentby Pharma Company 1 because " the second product i s pa r tne redwith a smal l b io tech company, while f i r s t was i n t e rna l to[Pharma Company 1] only ." The SAC Owner responded: "and I wouldth ink u have a l i ne i n to smal l co," to which Martoma responded"yes . "

d. On o r about Apri l 11, 2008 and Apr i l 12, 2008,the SAC Owner exchanged severa l e-mai l s with two CR INTRINSIChea l th care ana lys t s ("Analyst 1" and "Analyst 2") aboutin fo rmat ion they had obtained through a pa id consu l ta t ion with ac l i n i c a l i n v e s t i g a t o r ( the "Cl in ica l Inves t igator" ) for a drugt r i a l being conducted by Elan and Wyeth fo r an Alzheimer ' sdisease drug ( the "Drug Tr ia l " ) . Analyst 2 e-mailed the SACOwner t ha t the C l i n i c a l Inves t iga to r had t o ld Analys t 2 t h a t he"had seen the da ta as of December" fo r th e Drug Tr ia l , and t h a t" i t was not s t a t s ign i f i c a n t . " In a second e-mai l to the SACOwner, Analyst 1 added t ha t the Cl in ica l Inves t iga to r had t o ld

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them t ha t th e da ta from an " in te r im look" was " ' c los e ' tos ign i f i can t " in some cases and t h a t it "was poss ib le bu tunl ike ly" t ha t the " f ina l data" would be s t a t i s t i c a l l ys ign i f i c a n t . In a t h i rd e-mai l , Analyst 1 responded to the SACOwner's ques t ion about whether it was l i ke ly tha t the C l in i ca lInves t iga to r had seen t h i s da ta by r e i t e ra t i ng t ha t the Cl in ica lInves t iga to r " sa id he saw the da ta before agreeing to be in thestudy" and t ha t it would not be "unreasonable" fo r the Cl in ica lInves t iga to r to be among the "smal l # of ppl [who] have seen the[Drug Tria l ] data ." The SAC Owner did not ques t ion o r expressconcern t ha t Analys t 1 o r Analyst 2 were paying a docto rinvolved in a drug t r i a l fo r a consu l ta t ion about non-publ icdrug t r i a l da ta seen by only a " s m a l l# of pp l . " Ins tead , theSAC Owner d i rec ted Martoma to fo l low-up with the Cl in ica lInves t iga to r , which Martoma d id and repor ted back.

e . Indeed, the SAC Owner expressed confidencein Martoma on th e grounds t ha t Martoma was "close" to sources ofinformat ion abou t the Drug Tr i a l while f a i l i ng to expressconcern about th e po te n t i a l fo r Martoma to rece ive Ins ideInformat ion from these sources . For example, in an i n s t a n tmessage exchange on o r about Apr i l 6, 2008, the SAC Ownerresponded to Analys t 2 's inquiry as to whether th e SAC Owner had

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"been able t o g e t a b e t t e r sense of why Martoma th inks" th e DrugTr i a l da ta would be s t a t i s t i c a l l y s ign i f i c a n t as fo l lows: "seemsl i ke Mat [Martoma] has a lo t of good re l a t ionsh ips i n t h i sarena ." In ano ther i n s t a n t message, on o r about March 26, 2008,the SAC Owner responded to Analyst 1 's ques t ion as to whetherMartoma and a second person "know something o r do they have avery s t rong fee l ing" as fol lows: " tough one[ . ] I th ink Mat[Martoma] i s c l o se s t to i t . " Analyst 1 and Analyst 2 complainedin e-mai l s between themselves t h a t Martoma was " t e l l i ng pp l hehas black edge" - a phrase meaning Ins ide Informat ion - withre spec t to th e outcome of the Drug Tr ia l . Analyst 1 and Analyst2 expressed no concern in these e-mai l s about th e l e ga l i t y ofMartoma proposing to t r ade on the Ins ide Information, focusingin s tead on whether Martoma was being " i n t e l l ec t ua l l y honest" int e l l i ng people he had "black edge" when Analys t 1 and Analyst 2be l ieved it was not ye t poss ib le to know th e Drug T r i a l r e s u l t s .

22. Simi la r ly , in connect ion wi th th e h i r ing process ,th e SAC Owner f a i l e d to ques t ion candidates who a t minimumimpl ied t h a t t h e i r "edge" was based on sources of Ins ideInformat ion. For example, on seve ra l occas ions in June 2009, CBLee spoke to th e SAC Owner about the poss i b i l i t y of providingthe SAC Owner with t r ad ing ideas on p a r t i c u l a r companies in

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re tu rn fo r a payout on th e SAC Owner 's p r o f i t s . CB Lee t o ld theSAC Owner t h a t he had people in s a les and in f inance a t NVIDIAwho gave him in fo rmat ion re l a t ing to quar t e r ly earnings and acon tac t a t TSMC who provided him with wafer da ta . The SAC Ownerdid not express any concern about CB Lee ' s proposed sources o fin fo rmat ion during these conversa t ions .

23. Also fur ther ing th e scheme, the SAC Ownerfos te red a cu l tu re t ha t focused on not discuss ing Ins ideInformat ion too openly, ra the r than not seeking o r t r ad ing onsuch informat ion in the f i r s t place . For example, on o r aboutJu ly 29, 2009, a r ecen t l y hi red SAC PM ( the "New PM") sent ani n s t a n t message to th e SAC Owner and re layed t ha t , due to some" recen t re sea rch , " the New PM planned to shor t Nokia when hes t a r t ed work 10 days l a t e r . The New PM apologized fo r being"crypt ic" but noted t h a t the head of SAC compliance "was givingme Rules 101 yes t e rday - so I won ' t be saying much [ .] [T] oosca ry . " The SAC Owner d id not r e a c t o r respond in the i n s t a n tmessage to the New PM's proposa l to t r ade s e c ur i t i e s based onin fo rmat ion t h a t th e New PM was "scar[ed]" to t e l l the SAC Ownerfo r f ea r of v i o l a t i n g compliance ru l e s .

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Ine f fec t ive Compliance Programs That Fai led To Detec t Or ThwartIn s i d e r Trading

24. Further ing th e scheme, the SAC ENTITY DEFENDANTSemployed l im i t ed compliance measures designed to d e t ec t o rp rev en t i n s ide r t r ad ing by SAC PMs o r SAC RAs. As an i n i t i a lmat te r , th e SAC ENTITY DEFENDANTS automat ica l ly purged a l li n s t a n t messages a f t e r 36 hours and a l l e-mai l s nota f f i rma t ive ly saved a f t e r 30 days u n t i l adopting a rev i sed

document r e t e n t i o n po l icy in September 2008. In add i t ion , p r i o rto approximate ly l a t e 2009, SAC's compliance depar tment r a r e l yreviewed e lec t ron ic communications by SAC employees fo rsuspic ious terms sugges t ing p o t e n t i a l i n s i d e r t r ad ing ,notwi ths tand ing the f a c t t ha t the head of SAC compliance hadrecommended such searches to SAC management as e a r l y as 2005.

25. Although th e SAC compliance department ,beginning in approximate ly 2006, proh ib i ted th e use of exper tnetworks to make payments to publ ic company employees fo rindus t ry in fo rmat ion , SAC encouraged d i r e c t con tac t with publ iccompany employees a t var ious l eve l s out s ide of these networks.For example, in o r around 2006, when Richard Lee i n i t i a l l yin te rv iewed fo r a job a t SAC and to ld a sen io r SAC execut ivet ha t h is investment process involved , among o th e r th ings ,consu l ta t ions through an expe r t network, th e SAC execu t ive

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responded in substance t h a t most SAC PMs r e l i e d on t h e i r ownpersona l networks of i ndus t ry con tac t s . In fac t , as r e f l e c t e din examples noted elsewhere in t h i s Indictment , SAC PMs and SACRAs rou t ine ly consul ted publ ic company employees a t var iousl ev e l s and recommended t rad ing ideas to th e SAC Owner express lybased on in fo rmat ion ob ta ined through con tac t s a t thesecompanies.

26. Moreover, notwi ths tanding t ha t the SACcompliance depar tment was apparen t ly aware t h a t exper t networkspresented a r i sk of i n s i d e r t r ad ing , the SAC compliancedepar tment f a i l e d to e f f e c t ive ly moni tor SAC employees ' use ofexper t networking f i rms. For example, th e SAC compliancedepar tment f a i l e d t o d e t ec t o r preven t Martoma from using anexper t network fo r approximately 42 consu l ta t ions with a docto rinvolved in th e Drug Tr ia l , even though some of the expe r tnetworking f i rm ' s schedul ing e-mai ls with Mar toma- sent throughth e SAC e-mai l system - express ly s t a t e d t ha t (1) the doc to r inques t ion had c o n f i d e n t i a l informat ion about the Drug Tr i a l ; and(2) th e purpose of th e consu l ta t ion was to ask the doctor aboutth e exper imenta l medic ine being t e s t ed in th e Drug Tr ia l . Thedocto r in ques t ion i n fac t provided Martoma with Ins ide

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Informat ion about the Drug Tr i a l during many of theseconsu l ta t ions .

27. Also fu r the r ing the scheme, on seve ra l occas ionsSAC management fa i l ed to r e f e r t r ad ing recommendations t h a tappeared to be based on Ins ide In format ion to SAC's compliancedepar tment fo r i nves t iga t ion . For example, on o r about October30, 2007, Horvath ' s t r ad ing recommendation emai led to the SACOwner concerning Sun s ta ted n[m]y edge i s contac ts a t th ecompany and t h e i r d i s t r i bu t ion channel . " Ste inberg , who wascopied on the e -mai l , forwarded it to the SIGMA CAPITAL ChiefOpera t ing O f f i ce r (the ncOO") with the comment: ni suspect thel i ne about con tac t s a t th e company may wake up some of our l eg a leag les . " The COO responded: " I th ink it might pre c ip i t a t e agenera l i nqu i ry to conf i rm we are not in possess ion of nonpubl i c in fo rmat ion . This seems l i ke an investment idea , n ot at r ade and my i n t e rp r e t a t i on of h is comment i s j u s t t ha t hedeveloped good re l a t ionsh ips with mgmt. t h a t enhance h is comfortl e v e l . " The COO ar r ived a t t h i s benign (and unsubs tant ia ted)i n t e rp r e t a t i on withou t anyone in te rv iewing Horvath about h is e-mai l . In t ru t h and i n f a c t , Horvath 's e-mai l was based onco n f id en t i a l in fo rmat ion about Sun earnings t h a t Horvath hadobta ined from h is con tac t a t Sun.

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28. Also fu r the r ing th e scheme, the l imi t ed number ofi n t e rna l i n v es t i g a t i o n s by th e SAC compliance department ofi n s i d e r t r ad ing were genera l ly weak, with a focus on"confi rming" with a SAC PM o r SAC RA in an in terview t h a t an emai l implying access to Ins ide Informat ion was an i na r t fu l l yd r a f t ed e-mai l . In fac t , desp i t e numerous documented cases ofi n s i d e r t r ad ing a t SAC - es tab l i shed by, among othe r th ings ,gu i l t y p leas of s ix former SAC PMs and RAs who each committedi n s i d e r t r ad ing on numerous occasions and over a subs tan t i a lpe r iod of t ime while employed a t SAC- SAC's compliancedepartment contemporaneously i de n t i f i e d only a s ing le ins tanceof suspec ted i n s ide r t r ad ing by i t s employees in i t s h i s to ry .

29. SAC's r eso lu t ion of th e one case in which iti de n t i f i e d suspec ted i n s i d e r t r ad ing a l so r e f l e c t e d a lack ofcommitment to address the i s sue . On t h i s occasion, informat ionreviewed by SAC's compliance depar tment demonstra ted t ha t CRI n t r i n s i c PM-1 and a second PM ("SAC PM-1") had rece ived andthen t r aded based on an advance t ip from an outs ide hea l th careana lys t ( the "Heal th Care Analyst") a t a research firm doingbus iness with th e SAC ENTITY DEFENDANTS. In pa r t i c u l a r ,evidence reviewed by th e SAC compliance depar tment r e f l e c t e dt ha t on th e evening of Ju ly 27, 2009, th e Heal th Care Analys t

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communicated to CR In t r i n s i c PM-1 t ha t h is firm would pub l ic lyr e l ea s e a nega t ive re sea rch r epor t th e next day about hea l thcare company Medicisr Inc . ("Medicis 11 ). CR In t r i n s i c PM-1 thent o ld t h i s to t he re sea rch ana lys t fo r SAC PM-1. SAC PM-1 1 Sre sea rch ana lys t then admi t ted - as cor robora ted by e-mai l s andphone records - t h a t he had 1 a t SAC PM-1 1 S d i rec t ion / ca l l ed theHeal th Care Analys t and l ea rned t ha t the nega t ive researchr ep o r t would be p u b l i c ly re leased in th e "pm 11 of Ju ly 28 1 2009.Both CR I n t r i n s i c PM-1 and SAC PM-1 shor ted the s tock of Medicisbefore the r e p o r t was re l ea sed t h a t evening. Despi te th i s r anddesp i te the f a c t t h a t it was th e SAC Owner who had i n i t i a l l yi nqu i red about t he t r ad ing / th e consequences were l imi ted . TheSAC ENTITY DEFENDANTS imposed monetary f ine s on the twooffenders 1 but al lowed them to keep t h e i r jobs / and fa i l ed torepor t the i n s ide r t r ad ing to any regu la to ry o r law enforcementpersonnel .

Examples Of Ins ider Trading By Agents Of Each Of TheSAC ENTITY DEFENDANTS

30. In connect ion with the scheme descr ibed above/SAC CAPITAL LPr SAC CAPITAL LLC 1 CR INTRINSIC and SIGMA CAPITAL 1th e defendants/ th rough the conduct of t h e i r agents / sought toob ta in and t r ade upon Ins ide In fo rmat ion on mul t ip l e occasions

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between 1999 and a t l e a s t 2010. This t rad ing inc ludes - b u t i snot l imi ted to - the conduct descr ibed below.Ins ide r Trading By Agents Of CR INTRINSIC

31. Agents of CR INTRINSIC, the defendant , obtainedand t raded upon Ins ide Informat ion on mult ip le occas ions ,inc luding but not l imi ted to the examples descr ibed below:

a . Trading By Martoma And The SAC Owner In Elan AndWyeth. As of mid-July 2008, the SAC Hedge Fund's l a rg e s t equi tysecu r i t i e s pos i t ion cons i s ted of over $700 mil l ion worth of ElanAmerican Deposi tory Receipts ("ADRs") and Wyeth common s tock.Th e SAC Owner had accumulated the pos i t ion in la rge p a r t on therecommendation of Martoma. On o r about July 17, 2008, Martomaobta ined nega t ive Ins ide Informat ion from a medical doc torinvolved in th e Drug Tr ia l being conducted by Elan and Wyeth.On or about Saturday, July 19, 2008, Martoma met with the doctorin person in Michigan. On o r about the morning of Sunday, July20, 2008, Martoma spoke by te lephone to the SAC Owner, who thenext day began se l l i ng the en t i r e $700 mil l ion pos i t ion andshor t ing approximately $260 mil l ion worth of Elan and Wyeths tock pr i o r to th e publ ic announcement of the Drug Tr i a l r e s u l t son o r about Ju ly 29, 2008. The SAC Hedge Fund's pro f i t s and

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avoided lo s ses from t h i s i l l e g a l i n s ide r t rad ing amounted toapproximately $276 mil l ion .

b. Trading By Two SAC PMs And Th e SAC Owner Based OnInformat ion From CR In t r i n s i c RA-1. On var ious occas ions in2008 and 2009, a technology sec to r research analys t fo r CRIn t r i n s i c ("CR In t r i n s i c RA-1") obta ined Ins ide Informat ion fromcontacts a t var ious technology companies, inc luding earningsinformat ion from Del l (from the same source who provided Ins ideInformat ion to Horvath) and acquis i t ion- re la ted informat ion fromFoundry Networks Inc. ("Foundry"). The two SAC PMs to whom CRIn t r in s i c RA-1 repor ted and the SAC Owner a l l placed pro f i t a b l et r ades on one o r more occas ions shor t ly a f t e r recommendationsmade on the bas i s of Ins ide Informat ion known to CR In t r i n s i cRA-1.Ins ide r Trading By Agents Of SIGMA CAPITAL

32. Agents of SIGMA CAPITAL, the defendant , obtainedand t raded upon Ins ide Informat ion on mult ip le occas ions ,inc luding bu t not l imi ted to the examples described below:

a . Trading By Ste inberg And The SAC Owner Based OnInformat ion From Horvath. On o r about August 18, 2008, Horvathl ea rned from a con tac t i n h i s network t ha t an i n s i d e r a t Dellhad d isc losed t ha t De l l ' s earnings would be below market

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expec ta t ions and provided t ha t informat ion to Ste inberg , whoimmediately began shor t ing shares of Del l stock in S te inberg ' sp o r t f o l i o . On o r about August 26, 2008 a t 12:37 p .m. , Steinberge-mai led Horvath t ha t he had been " ta lk ing to [ the SAC Owner]about Dell e a r l i e r today" and t h a t the SAC Owner wanted Horvathto "compare notes" with a d i f f e r e n t SAC PM who had t aken acon t ra ry , bu l l i s h pos i t ion on Del l . At approximately 1:09 p.m.,Horvath responded to Ste inberg and the bu l l i s h SAC PM by e-mai l :

G" I have a 2nd hand read from someone a t the company - th i s i s3 rd q u a r t e r I have go t ten th i s read from them and it has beenvery good in the l a s t two quar te r s . Please keep toyourse lves as obviously not wel l known." The e-mai l fu r the rr epor ted t h a t th e gross margin fo r Del l would f a l l shor t by "50-80 bps [bas is po in t s ] . " The bu l l i s h SAC PM then forwarded theHorvath e-mai l to a "research t rade r" fo r the SAC Owner whoass i s t ed the SAC Owner in t rad ing technology s tocks . Theresearch t rade r , in tu rn , forwarded Horvath ' s e -mai l d i r e c t ly toth e SAC Owner a t approximately 1:29 p.m. and spoke by phone toth e SAC Owner a t 1:37 p.m. fo r approximately one minute . Atapproximately 1:39 p.m. , the SAC Owner began se l l i ng Dell sharesin h is own por t fo l io , clos ing out h is e n t i r e approximately $12.5mi l l i o n pos i t ion p r i o r to the d isappoint ing earn ings

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announcement, avoiding lo s ses of approximately $1.7 mil l ion . Ono r about August 28, 2008, a f t e r Dell had publ ic ly announcedearnings t ha t , cons i s t en t with Horvath 's Ins ide Informat ion,were below market expec ta t ions , the SAC Owner e-mai ledSte inberg ' s group, inc luding Horvath: "Nice job on de l l . "

b. Trading By Sigma PM-1 Based On Ins ide Informat ionFrom Wang. Between approximately 2002 and 2005, in connect ionwith h is employment as a SAC RA, Wang recommended t rades toSigma PM-1 based on Ins ide Informat ion tha t Wang obta ined from anetwork of con tac t s a t pub l i c ly - t raded technology companies,inc luding but not l imi ted to TSMC, Cisco, Broadcom, eBay,Cypress, Polycom, QLogic and Cirrus .

c . Trading Based On Ins ide Informat ion From CB Lee.Between approximately 2008 and 2009, former SIGMA CAPITAL PM CBLee, who by then was operat ing h is own hedge fund, recommendedt r ades based on Ins ide Informat ion to Sigma PM-1. The Ins ideInformat ion involved va r ious technology sec to r stocks, includingDell and NVIDIA. For example, in a recorded c a l l on o r aboutJanuary 16, 2009, CB Lee to ld Sigma PM-1, "between you and me,"t ha t "a f r i end of my cousin" who "works fo r Del l f inance ," i s" t e l l i ng me to avoid the s tock fo r Q2, because Q2 i s gonna behor r ib le . " In a fol low-up recorded ca l l on o r about January 23,

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2009, CB Lee r e i t e ra t ed to Sigma PM-1 t ha t "I do have a con tac ta t Del l , he ' s in f inance" and t ha t the contact was repor t ingt ha t th e "Apri l quar t e r could see a problem with gross margins"because sa les to businesses were "very weak and t ha t ' s wheremost of the p ro f i t a b i l i t y i s . "Ins ide r Trading By Agents Of SAC CAPITAL LP

33. Agents of SAC CAPITAL LP, th e defendant , obtainedand t raded upon Ins ide Informat ion on mult ip le occas ions ,inc luding bu t not l imi ted to the examples descr ibed below:

a . Trading By Richard Lee. On var iousoccas ions between approximately Apr i l 2009 through approximately2010, Richard Lee - who had been h i red by SAC CAPITAL LP desp i tea warning to the SAC Owner t ha t he had been pa r t of an " ins ide rt rad ing group" a t a pr io r employer - t raded on Ins ideIn format ion in the $1.25 b i l l i on " spec ia l s i tua t ions" SACpor t fo l i o Richard Lee j o i n t l y managed with a second SAC PM. Forexample, Richard Lee obtained, from a con tac t a t a pr iva teequi ty f irm with a s take in Yahoo, both ea r ly access to a Yahooearnings repor t and informat ion r e l a t i ng to a contemplatedpartnersh ip with Microsoft , the l a t t e r of which ul t imate ly tookplace in or around July 2009. Richard Lee - as well as o therSAC PMs - also spoke to a technology ana lys t (the "Tech

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Analyst") from a research firm doing business with the SAC HedgeFunds about the po te n t i a l Yahoo-Microsoft par tne r sh ip . In arecorded c a l l with Richard Lee on or about July 10, 2009, theTech Analys t t o ld Richard Lee t ha t h is "buddy," a "senior guy a tMicrosof t" who had been "very, very accura te in the pas t , " to ldth e Tech Analyst t ha t a "senior team from Yahoo" had a r r ived a tMicrosof t to meet "the two senior -most people in [the] Microsof ti n t e rne t bus iness" to r e s t a r t deal t a lks .In s i d e r Trading By Agents Of Mult iple SAC ENTITY DEFENDANTS,Inc luding SAC CAPITAL LLC and SAC CAPITAL LP

34. In some cases , such as the examples descr ibedherein , ins tances of i n s ide r t r ad ing involved agent s of mult ip leSAC ENTITY DEFENDANTS e i t h e r because d i f f e r e n t employeesinvolved in the t r ad ing worked fo r d i f f e r e n t SAC managementcompanies o r because the employees switched between managementcompanies during the course of t h e i r employment. Examples ofsuch t r ad ing inc lude bu t are not l imi ted to the fol lowing:

a . Trading.At SAC CAPITAL LLC And SIGMA CAPITALBased On Ins ide Informat ion From CB Lee. In connec t ion wi th h isemployment as a SAC RA a t SAC CAPITAL LLC and then SIGMACAPITAL, CB Lee sought and obtained Ins ide Informat ion throughd i r e c t and i nd i rec t contacts a t va r ious technology companiesbetween approximately 1999 and 2004, inc luding but not l imi ted

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to In t e l , AMD, and Alte ra . CB Lee then recommended t rades basedon t h i s Ins ide Informat ion to the por t fo l io manager to whom herepor ted and in some ins tances to the SAC Owner d i r e c t ly . Inthese t rad ing recommendations, CB Lee t yp i c a l ly described thesource of the informat ion as being from "my guy," "my con tac t , "o r "my check" "a t" the company in ques t ion .

b. Trading At SAC CAPITAL LLC, SAC CAPITAL LP AndCR INTRINSIC Based On Ins ide Information From Freeman AndLongueuil . In connect ion with t h e i r employment, Freeman(employed f i r s t by SAC CAPITAL LLC and then SAC CAPITAL LP) andLongueuil (employed by CR INTRINSIC) obtained and t raded onIns ide Informat ion between approximate ly 2008 and 2010 in a

v a r i ~ t y of technology companies, inc luding but no t l imi ted toRIMM, NVIDIA, Marvel l , Avnet, Fai rch i ld , Atheros, Broadcom andDel l .

Statutory Allegat ions35. At var ious t imes from i n o r about 1999, through

a t l ea s t in o r about 2010, in the Southern D i s t r i c t of New Yorkand elsewhere , SAC CAPITAL LP, SAC CAPITAL LLC, CR INTRINSIC,and SIGMA CAPITAL, the defendants , wi l l fu l l y and knowingly,having devised and in tending to devise a scheme and a r t i f i c e todefraud, and fo r obta in ing money and proper ty by means of fa l se

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and f raudulent pre tenses , r ep resen ta t ions and promises , d idt r ansmi t and cause to be t r ansmi t t ed by means of wire , radio andt e lev i s ion communicat ion in i n t e r s t a t e and fore ign commerce,wri t ings , s igns , s igna l s , p ic tu res , and sounds fo r t he purposeof execut ing such scheme and a r t i f i c e , to wit , SAC ENTITYDEFENDANT employees and agen ts obta ined by te lephone, e-mai l ando ther e l e c t ro n i c forms of i n t e r s t a t e communication, whileloca ted in SAC ENTITY DEFENDANT o f f i c e s in Manhattan, New Yorkand e lsewhere , Ins ide Information concerning var ious publ iccompany s tocks , some of which were pub l ic ly - t r aded on a s tockexchange in Manhat tan, New York, fo r the purpose of execut ings e c ur i t i e s t ransac t ions based in whole o r i n pa r t on t h a t Ins ideInformat ion.

(T i t l e 18, United Sta tes Code, Sect ions 1343 and 2 .)COUNT TWO

(Secur i t i e s Fraud: SAC CAPITAL LP)The Grand Jury fu r t h e r charges :36. The a l l ega t ions contained in paragraphs 1 through

34 are repea ted and r ea l l eged as though fu l ly s e t fo r th here in .37. From i n o r about 2009, up through and inc lud ing

a t l e a s t in o r about 2010, in th e Southern D i s t r i c t of New Yorkand e lsewhere , SAC CAPITAL LP, the defendant , wi l l fu l l y and

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knowingly, d i rec t l y and i n d i r e c t l y , by the use of means andi n s t ru m e n t a l i t i e s of i n t e r s t a t e commerce, th e mails and th ef ac i l i t i e s of n a t io n a l s e c ur i t i e s exchanges, in connect ion withth e purchase and sa le of s e c ur i t i e s , did use and employmanipu la t ive and decep t ive devices and cont r ivances , inv io l a t i on of Ti t l e 17, Code of Federa l Regulat ions , Sec t ion240.10b-5, by (a) employing devices , schemes and a r t i f i c e s todefraud; (b) making unt rue s t a tements of mater ia l f ac t s andomi t t ing to s t a t e mater ia l fac t s necessary in orde r to make th es ta tements made, in l i g h t of the circumstances under which theywere made, not misleading; and (c) engaging in ac t s , p rac t i cesand courses of business which opera ted and would opera te as af raud and d e c e i t upon persons , to wit , SAC CAPITAL LP, throughi t s employees and agen t s , engaged in a scheme to obta in andt r ade upon Ins ide Informat ion.

(T i t l e 15, United Sta tes Code, Sect ions 78j (b ) & 78ff ;Ti t l e 17, Code of Federal Regulat ions , Sec t ion 240.10b-5 &240.10b5-2; and Ti t l e 18, United Sta tes Code, Sect ion 2.)

COUNT THREE

(Secur i t i e s Fraud: SAC CAPITAL LLC)The Grand Jury fu r the r charges :38. The a l l ega t ions con ta ined in paragraphs 1 through

34 a re repea ted and r ea l l eged as though fu l l y s e t fo r th he re in .35


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39. From in o r about 1999, up through and inc luding2008, in the Southern Di s t r i c t of New York and elsewhere , SACCAPITAL LLC, th e defendant , w i l l fu l l y and knowingly, d i r e c t lyand i nd i r e c t l y , by th e use of means and i n s t rumen ta l i t i e s ofi n t e r s t a t e commerce, the mai l s and th e f a c i l i t i e s of na t iona lsecu r i t i e s exchanges , in connect ion with th e purchase and sa leof s e c ur i t i e s , d id use and employ manipulat ive and decep t ivedev ices and cont r ivances , i n v i o l a t i o n of Ti t l e 17, Code ofFedera l Regu la t ions , Sec t ion 240.10b-5 , by (a) employingdev ices , schemes and a r t i f i c e s to defraud; (b) making unt rues ta tements of mater ia l f ac t s and omit t ing to s t a t e mater ia lf a c t s necessary in orde r to make the s t a tements made, in l i g h tof th e ci rcumstances under which they were made, not misleading;and (c) engaging in ac t s r prac t i ces and courses of bus inesswhich opera ted and would opera te as a f raud and d ece i t uponpersons , to wit , SAC CAPITAL LLC, through i t s employees andagents , engaged in a scheme to obta in and t r ade upon Ins ideInformat ion.

(T i t l e 15 1 United S ta t e s Code, Sect ions 78j (b) & 78f f ;Ti t l e 17, Code of Federal Regulat ions , Sec t ion 240.10b-5 &240.10b5-2; and Ti t l e 18, United S ta t e s Code, Sect ion 2 . )

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COUNT FOUR

(Secur i t i e s Fraud: CR INTRINSIC)

The Grand Jury fu r the r charges:40. The a l l ega t ions conta ined in paragraphs 1 through

34 are repea ted and r ea l l eged as though fu l l y s e t fo r th herein .41. From in or about 2006 up through and inc luding a t

l e a s t in o r about 2009, in the Southern D i s t r i c t of New York andelsewhere , CR INTRINSIC, the defendant , wi l l fu l l y and knowingly,d i rec t l y and i nd i rec t l y , by the use of means andi n s t rum e n ta l i t i e s of i n t e r s t a t e commerce, the mai ls and thef ac i l i t i e s of na t iona l secu r i t i e s exchanges, in connect ion withthe purchase and sa le of secu r i t i e s , did use and employmanipulat ive and decept ive devices and cont r ivances , inv io l a t i on of Ti t l e 17, Code of Federal Regulat ions , Sect ion240.10b-5, by (a) employing devices , schemes and a r t i f i c e s todefraud; (b) making unt rue sta tements of mater ia l fac t s andomi t t ing to s t a t e mater i a l fac t s necessary in order to make thes ta tements made, in l i g h t of the circumstances under which theywere made, not mis lead ing ; and (c ) engaging in ac ts , prac t i cesand courses of business which opera ted and would opera te as af raud and d e c e i t upon persons , to wit , CR INTRINSIC, through i t semployees and agents , engaged in a scheme to ob ta in and t rade

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upon Ins ide Informat ion.(T i t l e 15, United Sta tes Code, Sect ions 78j (b) & 78ff ;

Ti t l e 17, Code of Federal Regulat ions , Sect ion 240.10b-5 &240.10b5-2; and Ti t l e 18, United Sta tes Code, Sec t ion 2.)

COUNT FIVE

(Secur i t i e s Fraud: SIGMA CAPITAL)The Grand Jury fu r t h e r charges:42. The a l l ega t ions contained in paragraphs 1 through

34 are repea ted and r ea l l eged as though fu l l y s e t fo r th here in .43. From in o r about 2002, up through and inc luding

a t l e a s t in o r about 2009, in the Southern D i s t r i c t of New Yorkand elsewhere , SIGMA CAPITAL, the defendant , wi l l fu l l y andknowingly, d i rec t l y and i nd i r e c t l y , by the use of means andi n s t rum e n ta l i t i e s of i n t e r s t a t e commerce, the mails and thef a c i l i t i e s of na t iona l secu r i t i e s exchanges, in connect ion withthe purchase and sa le of secu r i t i e s , d id use and employmanipula t ive and decept ive dev ices and cont r ivances , inv io l a t i on of Ti t l e 17, Code of Federa l Regulat ions , Sec t ion240.10b-5 , by (a) employing devices , schemes and a r t i f i c e s todefraud; (b) making unt rue s ta tements of mater ia l fac t s andomit t ing to s t a t e mater ia l fac t s necessary in order to make thes ta tements made, in l i g h t of the circumstances under which theywere made, not misleading; and (c ) engaging in ac ts , p rac t ices

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and courses of business which operated and would opera te as af raud and dece i t upon persons, to wit , SIGMA CAPITAL, throughi t s employees and agents , engaged in a scheme to obta in andt rade upon Ins ide Informat ion.

(Ti t le 15, United Sta tes Code, Sect ions 78j (b) & 78f f iTi t l e 17, Code of Federa l Regulat ions , Sec t ion 240.10b-5 &240.10b5-2i and Ti t l e 18, United Sta tes Code, Sect ion 2 .)

FORFEITURE ALLEGATION

44. As a r e s u l t of committ ing the offenses a l leged inCounts One through Five of th i s Indictment , the SAC ENTITYDEFENDANTS s ha l l f o r f e i t to the United Sta tes , pursuan t to Ti t l e18, United Sta tes Code, Sect ion 981(a) (1) (C), and Ti t l e 28,United Sta tes Code, Sec t ion 2461, a l l prope r ty , r e a l andpersonal , which c ons t i t u t e s or i s der ived from proceedst raceab le to the commission of those offenses .

Subst i tute Asse ts Provis ion

45. I f any of the above-described fo r f e i t a b l eproper ty , as a r e s u l t of any a c t o r omission of the defendants :

a . cannot be located upon the exerc ise of duedi l igencei

b . has been t r ans fe r red or so ld to , ordepos i ted with, a t h i rd par ty i

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c . has been placed beyond the j u r i sd i c t i on ofthe cour t ;

d . has been s ubs t a n t i a l l y diminished in va lue ;o r

e . has been comming l ed with o ther proper tywhich cannot be divided without d i f f i cu l t y ;it i s the i n t e n t of the United Sta tes , pursuan t to Ti t l e 21,United Sta tes Code, Sec t ion 853(p) , to seek fo r fe i t u re of anyo the r proper ty o f sa id defendant up to the va lue of thef or fe i t ab l e proper t y descr ibed above.

(T i t l e 18, United Sta tes Code, Sec t ion 981; Ti t l e 21, UnitedSta t e s , Sec t ion 853(p) ; Ti t l e 28, United Sta tes Code,

Sec t ion 2461.}

PREET BHARARAUnited Sta tes Attorney

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

UNITED STATES DISTRICT COURTSOUTHERN 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 , andSIGMA CAPITAL MANAGEMENT, LLC ,

Defendants .

INDICTMENT

13 Cr .(18 u . s .c. 2, 1343; Ti t l e 15, UnitedS ta t e s Code, Sec t ions 78j (b ) & 78f f ;Ti t l e 17, Code of Federa l Regula t ions ,

Se c t ion 240. 10b-5)

PREET BHARARAUnited Sta tes Attorney.

Sac Filing Real

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