SAC Capital's settlement talks with the U.S. government, initiated by prosecutors last month, are moving along incrementally, said someone familiar with the matter.
With the hedge fund balking at a financial penalty of close to $2 billion, any resolution could still be weeks away.
In mid-September, the government approached SAC about the possibility of settling its criminal case over allegations of securities and wire fraud, a person familiar with those discussions said at the time.
Officials at SAC, although eager to resolve the case since the firm's July 25 indictment, were surprised by the timing, this person said, thinking any settlement would likely have to wait until two court cases over alleged insider trading by individuals at the firm were resolved.
(Read more: SAC is said to negotiate settlement of charges)
Since then, it's become apparent that prosecutors in the U.S. Attorney's office for the Southern District of Manhattan are aiming to settle for a payment of at least $1 billion, said the person familiar with the matter. But while SAC objects to a settlement that would be close to $2 billion, this person added, at what level the matter could be resolved remains unclear.
The talks have been complicated, said this person, by SAC's desire to see $616 million it already paid to resolve a prior Securities and Exchange Commission investigation deducted from any financial settlement.
Whether SAC or its subsidiaries would admit to any of the criminal allegations is reportedly also at issue. As a result, the settlement conversation between the government and the hedge fund has been "iterative" rather than a clear back-and-forth involving an offer and a counteroffer, this person added.
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Spokesmen for SAC and Manhattan's Southern District declined to comment.
In a story published Tuesday afternoon, the Financial Times reported that prosecutors had given SAC an ultimatum: settle the matter before the Nov. 18 start to the trial of Michael Steinberg, a veteran SAC trader accused of insider trading in two technology stocks, or risk losing a $1.8 billion offer now on the table.
—By CNBC's Kate Kelly. Follower her on Twitter @KateKelly.
