Details Emerge in SAC Capital Sex Harassment Case

Sexual harassment cases are nothing new on Wall Street, but CNBC has uncovered new details of one of the most salacious cases to hit a big trading house in a long time.

The case involves a sexual harassment lawsuit filed by a Andrew Z. Tong, a former junior trader at SAC Capital, the powerful Greenwich, Conn., hedge fund, against one of SAC’s top producers, a trader named Ping Jiang.

A New York State judge has sealed the case and sent the lawsuit into arbitration, where both sides would battle it out in private. He even cancelled oral arguments that were scheduled for Thursday following an appeal by Tong’s lawyers, who want the case to remain in state court.

The judge said he sealed the details of Tong’s allegations contained in the lawsuit because it is not in the public interest to disclose the salacious nature of the complaints. CNBC has learned the suit includes the following allegations made by Tong against Jiang:

• After being hired at SAC, Tong alleges that Jiang came to him and told him he had a trading method in which his traders must not be too aggressive; that traders must be more effeminate and to do so, he directed Tong to begin taking female hormones.
• Tong says he then took the female hormones that he bought on the black market.
• Tong then alleges he suffered emotional and physical distress. The hormones, he says, caused him to begin wearing women's clothes. He also could not perform sexually with his wife, who wanted to have a baby.
• Tong says the sexual harassment included sexual relations between the two men.

Tong's attorney had no comment.

SAC Capital and Jiang vehemently denying the charges, saying in a statement that: “SAC conducted a thorough investigation and found these scurrilous accusations to be false. We will vigorously defend ourselves and are confident that these claims will be swiftly rejected in arbitration.”

Tong was terminated by SAC Capital in April 2006 after working there less than a year. SAC, according to people close to the firm, say he was fired for cause. Tong, according to others, claim he was forced out of the firm.