On July 19, 2013, the SEC instituted administrative proceedings against Steven A. Cohen, the embattled founder of hedge fund adviser S.A.C. Capital Advisors, LLC (SAC).  Generally, the SEC charges Cohen with failing to supervise two of his portfolio managers, Mathew Martoma and Michael Steinberg, both of whom have been indicted on insider trading charges arising out of their trading for hedge funds advised by SAC.  See “Fund Manager CR Intrinsic and Former SAC Portfolio Manager Are Civilly and Criminally Charged in Alleged ‘Record’ $276 Million Insider Trading Scheme, Hedge Fund Law Report, Vol. 5, No. 44 (Nov. 21, 2012).  The SEC claims that Cohen ignored “red flags” that Steinberg and Martoma were trading on inside information.  While the SEC does not set forth the standard for “failure to supervise” liability in its order instituting administrative proceedings, the order nonetheless provides a glimpse into the activities that, in the agency’s view, represent a failure to supervise in the hedge fund context.  This article summarizes the factual allegations and administrative charges levied against Cohen by the SEC.  Notably, the SEC did not file civil charges against Cohen and did not charge him – administratively, civilly or otherwise – with insider trading.