With his firm's settlement with the U.S. Justice Department over criminal insider trading likely to be finalized soon, Steve Cohen is mulling an out-of-court resolution to a parallel Securities and Exchange Commission case in which he himself is the defendant, according to people familiar with the matter.
In recent weeks, say these people, Cohen and his advisors have been discussing the possibility of settling civil charges that he failed to supervise employees who engaged in criminal insider trading, despite indications of potential misconduct that, the SEC has argued, should have served as red flags.
Key to Cohen in any potential settlement, add these people, would be the length and nature of a ban on his oversight of investor funds that an SEC official has said the agency is seeking. A broader securities-industry ban could curb Cohen's ability to trade the firm's assets in the market and even to manage his own employees, prohibitions that people who know Cohen say would be hard for the hands-on hedge-fund manager to stomach. But that does not appear to be the type of ban that is in question.
An SAC spokesman declined to comment, and SEC officials did not respond to requests for comment.
(Read more: SAC to start keeping closer watch over workers)
The SEC's civil case, filed July 19, blamed Cohen for turning a blind eye to criminal insider trading at his own firm during the late 2000s. In a strongly-worded complaint, SEC lawyers alleged that Cohen "failed to reasonably supervise two of his senior employees, who engaged on insider trading under his watch," and that Cohen "failed to take reasonable steps to investigate and prevent such violations." It even suggested that Cohen sold shares of Dell Computer at one point in 2008 after he had received a tip from an SAC underling that was based on information from someone at Dell – a source that Cohen, the SEC argued, should have realized could have been an illegal tipster.
"The Enforcement Division is seeking to bar Cohen from overseeing investor funds," stated Andrew Ceresney, the co-head of SEC enforcement at the time, in a government press release. (Ceresney is now sole head of enforcement.)
SAC initially denied the charges against Cohen, arguing in a white paper distributed to its employees shortly after the case was filed that "any fair review of the evidence will show that the SEC's charges are unfounded." But the civil case against Cohen was soon eclipsed by its criminal counterpart against the firm, which was filed several days later by the U.S. Attorney for the Southern District of New York, sending shock waves through both SAC and the hedge-fund business more broadly.
The sentencing in that case, which the SAC and Justice Department settled late last year for a total of $1.8 billion in fines and penalties and an admission of wrongdoing, is scheduled for April 10, by which point a federal judge is widely expected to have approved it. Those events will pave the way for the civil case against Cohen, which has been stayed until its criminal counterpart is resolved, to resume.
As part of the planned criminal settlement with the Justice Department, SAC has returned nearly all the public assets it once managed, and plans to become a private hedge fund managing between $9 billion and $10 billion—otherwise known as a family office—starting April 7. It will then change the name of its flagship stock-trading fund to Point72.
(Read more: Battered SAC Capital morphs into Point72)
After all that's transpired, reestablishing itself as a public hedge fund, managing external capital in addition to the assets of Cohen, his family, and his employees, could prove difficult for SAC, even if Cohen's bar from managing outside money is framed as temporary in an SEC settlement. Although Cohen's situation is somewhat unique, generally speaking, more than 90 percent of individuals the SEC bans from the securities industry never apply for reinstatement to the role, according to an agency spokesman, because regaining the public trust or being hired back into the industry proves too difficult.
—By CNBC's Kate Kelly. Follow her on Twitter @KateKellyCNBC.