On July 19, 2013, the SEC filed an order instituting administrative proceedings against Steven A. Cohen, the founder of S.A.C. Capital Advisors, LLC (SAC Capital), generally alleging that Cohen failed to supervise two portfolio managers, Mathew Martoma and Michael Steinberg, by ignoring “red flags” that should have alerted him to their allegedly improper conduct in relation to fund investments in Elan Corporation, Plc, Wyeth and Dell, Inc.  See “SEC Charges Steven A. Cohen with Failing to Supervise Employees Who Allegedly Engaged in Insider Trading,” above, in this issue of Hedge Fund Law Report.  In short, in a 46-page white paper (White Paper) dated July 22, 2013, Cohen’s defense team argues that there is no evidence to suggest that Cohen was aware of Martoma’s and Steinberg’s allegedly suspicious conduct and denied the characterization of the delineated conduct as representing “red flags.”  Furthermore, the White Paper argues that Cohen’s commitment to robust compliance, as demonstrated by his and SAC Capital’s development of a rigorous compliance program, belies any suggestion that Cohen overlooked the identified “red flags.”  Importantly, the White Paper also gives a behind-the-scenes look at the compliance program (most notably the insider trading controls) at one of the most sophisticated hedge fund firms in the world.  This article summarizes salient content from the White Paper.  For an in-depth discussion of the SEC’s settlement with SAC Capital and its affiliates relating to the above-referenced matters, see “Five Takeaways for Other Hedge Fund Managers from the SEC’s Record $602 Million Insider Trading Settlement with CR Intrinsic,” Hedge Fund Law Report, Vol. 6, No. 12 (Mar. 21, 2013).