Federal investigators have been circling SAC Capital and its founder, Greenwich billionaire Steve Cohen, for years, over suspicions that Cohen's hedge fund has been a nest of illegal insider trading. Their investigative tactics have been aggressive — wire-tapping Cohen at his home, busting one of his lieutenants and prodding him to flip on the boss — but have not thus far produced enough evidence to charge Cohen with anything.
Now the feds have hit another roadblock. They don't have any e-mail evidence from SAC during the time period they're investigating, owing to the firm's policy of automatically deleting e-mails after a month or two.
According to Bloomberg, SAC e-mails "were deleted from employee electronic mailboxes every 30 or 60 days" in 2008, the time period at the heart of the government's investigation. That sounds kind of sketchy, but it was probably just business as usual. Until last year, when new laws requiring hedge funds to register with the SEC and file more detailed paperwork came into effect, there was no rule requiring firms to maintain archives of e-mails and IMs on their servers. So naturally, many didn't. (Happily for us, banks have long had to keep records of their communication, which is how we get "whores drawers" and emoticons about Libor-rigging.)
Prosecutors do have some e-mails from the time period they're focusing on, Bloomberg says, thanks to some SAC Capital employees' regrettable habit of moving e-mails off the company's servers and into personal folders. Still, it's pretty tough to conduct an insider-trading investigation — especially one with so many other problems — without having access to the vast majority of communication between alleged co-conspirators.
Good thing SAC's traders didn't have the Snapchat option on their Bloomberg terminals enabled, or the feds would really be in trouble.