burningmoneyTomahawk, WI 4/2/2013 (BasicsMedia) – On the same day that prosecutors announced insider trading charges against a former portfolio manager at the hedge fund SAC Capital Advisors, a judge signed off on a civil settlement between the fund and regulators related to the same set of facts.

Judge Harold Baer of Federal District Court in Manhattan approved a pact late Friday in which SAC agreed to pay $14 million to settle accusations by the Securities and Exchange Commission that the fund’s Sigma Capital unit illegally traded in  shares of technology companies after a former analyst there obtained secret information about the companies. As part of the agreement, SAC neither admitted nor denied wrongdoing.

The former SAC analyst, Jon Horvath, last fall pleaded guilty to participating in the scheme, and said he passed along the information to his supervisor, who then traded on it. His supervisor was Michael S. Steinberg, who was arrested on Friday. He pleaded not guilty, and his lawyer, Barry H. Berke, said that his client had done nothing wrong.

Judge Baer did not raise any concerns with SAC’s $14 million settlement, signing off on the deal in a perfunctory series of orders without comment.

Yet his approval came during the same week that another judge expressed skepticism over the terms of a larger settlement that SAC struck with regulators.

Judge Victor Marrero raised questions about the larger deal, a record $602 million agreement related to a separate insider trading case. He took issue with the government allowing SAC to settle the case without having to admit any wrongdoing.

“There is something counterintuitive and incongruous about settling for $600 million if it truly did nothing wrong,” the judge said  at last week’s hearing.

Judge Marrero declined to sign off on the $602 million settlement, which relates to SAC allegedly gaining $275 million in profits or avoided losses from insider trading in two pharmaceutical stock.

Instead, Judge Marrero hinted that he might approve it subject to the outcome of a pending ruling in a federal appeals court that is expected to weigh in on the “neither admit nor deny wrongdoing” language used by government agencies in reaching settlements with government agencies. That case relates to a settlement between Citigroup (NYSE: C) and the S.E.C. over accusations of fraud in the bank’s sale of a complex mortgage-bond deal.

The different approaches by the two judges highlight an emerging debate in the judiciary over a judge’s role in approving such settlements. In recent months, federal judges across the country have taken issue with agencies like the S.E.C. letting defendants off easy by not forcing them to acknowledge wrongdoing.

An SAC spokesman declined to comment on the approval of the $14 million settlement. When both settlements were struck earlier this month, the spokesman, Jonathan Gasthalter, said they were “a substantial step toward resolving all outstanding regulatory matters.”

By Peter Lattman of The New York Times

Disclaimer: I have no position in any of the companies mentioned in this article.

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