Overview
In an opinion today, Judge Marrero denied SAC Capital’s motion to dismiss a class action brought by investors in Wyeth and Elan stock who traded contemporaneously with trades that SAC allegedly made based on inside information. SAC argued (among other things) that it already disgorged to the SEC an amount larger than the amount sought in the complaint for some of the claims, but Judge Marrero found that the precise amount of any offset would have to be determined in discovery:
SAC's contention amounts to a novel and curious proposition. Because Plaintiffs' preliminary statement of damages set forth in the complaint is favorable to Defendants in relation to the amount of SAC' s disgorgement, SAC seeks to hold Plaintiffs to their estimation without an opportunity for them to gather evidence with which to establish a more precise amount based on a fully documented record. This theory is flawed on at least two accounts. Plaintiffs' appraisal of damages at the pleading stages is just that, an estimate, not mathematical fact. Second, SAC's contention presupposes that the amount of its disgorgement under the SEC settlement is an absolute benchmark, giving it the status of scientific truth. But, by what authority is this Court to find that the SAC disgorgement is incontestably accurate and not open to question by other interested persons? That amount was not determined through a public adversarial proceeding; it was negotiated by SAC and the SEC in private and presented to the Court as a settlement agreement. What is to say that the profits and losses assumptions and computations SAC and the SEC relied upon in reaching an accord are necessarily correct?
