The winners and losers in SAC’s $1.8 billion guilty plea

That’s how much money SAC Capital agreed to pay on Monday, along with pleading guilty to the criminal insider trading charges. The question is whether getting to that number, and to the bottom of the wrongdoing at SAC, was worth the time and effort.

The New York Times says the government has been investigating insider trading charges since the beginning of last decade. SAC appears to have been an early target of those efforts, which have also led to more than 70 convictions, including hedge funder Raj Rajaratnam and former Goldman Sachs board member and McKinsey executive Rajat Gupta.

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The government is not done with Cohen. Two of his former lieutenants still face trials, and either could flip on him. And Cohen is still facing civil charges from the SEC, which could bar him from managing money forever. Nonetheless, the outcome so far of the government’s eight-year pursuit of Cohen is $1.8 billion (about 20% of his net worth) and an admission of guilt, which notably comes from the firm and not Cohen himself. Was it worth it?

Justice Department: Loser, sort of

The fact that the Justice Department wasn’t able to directly charge Cohen himself with breaking the law after all these years has got to be considered a loss for the government, at least for now. Plenty of Wall Streeters would gladly take Cohen’s success and wealth in return for agreeing to have their firm plead guilty for insider trading. Having to do jail time would be a different story. So you have to wonder just how much of a deterrent the case will be.

That being said, the Justice Department is not walking away empty-handed. And now that many others have gone to jail, perhaps the need for a deterrent has shrunk.

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Still, the government, and Bharara in particular, have been criticized for spending too much on insider trading, and not enough time on the misdeeds that may have led to the financial crisis. The huge haul from Cohen could quell criticism that this has been a waste of effort. And if you believe the punishment matches the crime, it’s clear that the insider trading probably was much bigger and much more damaging to the market and average investors. So that’s a win, sort of.

Steven Cohen: Winner, sort of

Cohen has reportedly griped to friends about having to pay $1.8 billion in penalties for insider trading, which he contends was conducted by others at his firm. But the real test of whether you think that’s a lot of money has to do with how much of Cohen’s fortune you think came from insider trading. If your view is all of it, then $2 billion of $9 billion seems like a good deal.

More importantly, Cohen stays out of jail. SAC will have to return all outside money. But, at least for now, there is nothing stopping Cohen from managing money for other investors. He just can’t do it at SAC. But he can close SAC, set up a new firm, and go about his business. That’s why the SEC is still trying to pursue a ban on Cohen, and why Cohen still is denying he did anything wrong. If they don’t get the ban on Cohen specifically, it’s hard to see how the current outcome is not a win for Cohen.

That being said, Cohen is far from out of legal trouble. Besides the government, Cohen and SAC are being sued by investors who invested in stocks in which SAC has been tied to insider trading. The fact that SAC has pleaded guilty could make these cases easier for plaintiff lawyers. Already, a class action suit has been filed on behalf of investors who lost $225 million on drug company Elan, which is the focus of one of the cases against an SAC lieutenant.

Hedge funds – Losers

A few years ago, people had considered insider trading, with the exception of Martha Stewart, largely a relic of the 1980s. It became so unregulated that it basically became a business model. A number of firms billing themselves as offering research popped up to funnel insider tips to hedge funds. They were known as insider networks.

MORE: Sorry, but hedge funds are not going away

Now hedge funds have to spend a lot of time and money proving their firms aren’t breaking the rules around insider trading. Many funds have stopped using outside research firms all together. And my colleague Roger Parloff, in his excellent Fortune cover story on insider trading, said some money managers won’t make a trade that they think could be seen as the result of insider information, even if they don’t think it actual breaks the law.

Perhaps it’s not coincidence that hedge funds had some of their best years in the mid-2000s, when most regulators were focused on accounting fraud, and not insider trading. Or the fact that recently hedge fund performance has been lackluster.

Numbers – Winner

The insider charges against Cohen, and the $13 billion settlement the government negotiating with JPMorgan Chase (JPM), are signs that financial crimes are coming with stiffer monetary penalties. So it has been a few good weeks for zeros.

But most fun part of the Justice Department’s guilty plea deal is where its goes into the math of how the government came to a fine of $1.8 billion for Cohen. According to the deal, the Justice Department gave SAC a “culpability score” of 5 based on the crime (out of 10 I assume but it doesn’t really say). The Department says it added 3 because the size of the crimes. But then it subtracted 1 because SAC agreed to plea guilty without going to trail. It also got a number of scores based on the illicit profits the firm got from insider trading, which ranged from 8 to 36. And from that, the Justice Department came to a decision that $1.8 billion was the correct fine. They could have just said, “How about nearly $2 billion? That feels right.” But they didn’t. They used a culpability formula. Math wins.