After being criminally indicted, the Stamford hedge fund SAC Capital Advisors, as a corporate entity, is probably toast, legal experts agreed Thursday.

But the next logical question is, "So what?"

"SAC Capital is a business with two giant piles of money," said Jonathan R. Macey, a prominent securities-law professor at Yale. "One giant pile is Stephen Cohen's, and the other giant pile belongs to his clients. If the civil suit is successful ... and if the criminal case is successful, the second pile of money will go away. But the Steven Cohen pile will still be there, and it won't be any less green than it was before."

The Securities and Exchange Commission filed civil charges last week against Cohen personally and accused him of failing to supervise two employees who have been charged with insider trading. The criminal indictment filed Thursday against SAC Capital does not name Cohen, a Greenwich resident, as a defendant.

`Unlikely to survive'

Joseph A. Grundfest, a Stanford Law School professor and a former SEC commissioner and counsel to the President's Council of Economic Advisers, gave a downbeat assessment of SAC Capital's future.

"There is a category of defendants who are unlikely to be able to survive an indictment," Grundfest said. "Even if at the end of the day they could prove to a jury they are innocent, they won't live long enough to make that demonstration. Large financial institutions may be in that category."

Adam Pritchard, professor of law at the University of Michigan, agreed. "It depends on the business the company is in. If they are making concrete, customers come to them for the concrete, not for their legal status. But if you are in the business of a trust relationship -- if you are managing money on your customers' behalf -- the indictment itself could be pretty much fatal."

`Legal fiction'

But Macey scoffed at the significance of that.

"A corporation is a legal fiction," he said. "For 80 bucks on the Internet, you can go make yourself another one." Pritchard said, "It raises the larger question of whether you think criminal liability for corporations makes sense at all. It's a fictional legal entity. Fictional legal entities don't hurt people. People hurt people."

Nevertheless, he said, "The tool is there for prosecutors who want to use it. Congress has signed off on it in a variety of contexts."

The legal scholars also agreed that the indictment of the company indicates they don't have the goods on Cohen himself -- yet.

"They have a lot of inferential evidence against Cohen, but they don't have enough direct evidence" to seek an indictment, said Michael Greenberger, a law professor at the University of Maryland and a former federal financial regulator.

`Admission of defeat'

The case against Cohen "seems to have stalled," Pritchard said, and Macey concurred.

"Somebody looking at this carefully can't help but conclude it's an admission of defeat," Macey said. "With the indictment of the corporation, with the civil suit, what the government is saying is, `We lost. We can't get Stephen Cohen, so we're going to settle on a scorched-earth policy to destroy everything around him.' "

Stanford's Grundfest said that still could change in a hurry if the government succeeds in doing what it has done in other insider-trading cases -- turn the littler fish against the big one.

"If (Mathew) Martoma or (Michael) Steinberg (former Cohen executives who have been charged with insider trading) flip, then a situation that's already quite difficult for Cohen becomes exceedingly difficult," he said.

No wiretap evidence

Greenberger noted that two other recent high-profile insider-trading cases, the ones against Raj Rajaratnam, founder of the Galleon Group hedge fund, and Westport resident Rajat Gupta, former director of Goldman Sachs, resulted in convictions in part because of wiretap evidence.

"There's not that kind of evidence" in this case, he pointed out.

Does indicting the corporation serve as a deterrent to illegal behavior?

"Reasonable people could agree or disagree about whether it's inadequate to use criminal sanctions against individuals, whether we have to ramp up and go after the entities, because otherwise the law will be under-enforced," said Pritchard. "But one thing it certainly means is that if you are running a hedge fund, your compliance obligations just got a lot more expensive."

`Life is ending'

Not so fast, said Macey. He thinks indicting the company, not Cohen, will have the opposite effect.

"If Steven Cohen had been more engaged, monitored the sources of information more closely, and they could prove that, he would have been indicted," Macey said. "He doesn't want to know where his traders got the information, and other managers aren't going to want to, either.

"If you're a future Steve Cohen out there in the hedge fund world, what this tells you is you're going to want to build up walls of deniability," he said. "Having your firm indicted is a cost of doing business. Being indicted yourself means your life is ending."

Of course, "It won't be much of a deterrent if the government loses the case," Professor Richard W. Painter of the University of Minnesota law school says. "I think they may have a hard time proving that the corporation knowingly engaged in insider trading."

Arthur Andersen, Lehman

Not only is the indictment not a deterrent, Macey says, it won't really hurt anybody.

"Look at the cases of Arthur Andersen, Lehman Brothers, and Dewey and Leboeuf (a prominent Wall Street law firm that fell into bankruptcy). The unindicted professionals all got other jobs. Nobody goes down with the ship any more."

In the case of Arthur Andersen, the Big Five accounting firm that was indicted in the Enron scandal and ultimately dissolved, Michigan's Pritchard pointed out that the government basically made a big mistake.

"The case was thrown out by the Supreme Court. They were wrong on the law. And the consequences for companies wanting to hire an accountant were pretty serious. It reduced the competition in an industry that was already oligopolized. Now instead of having five choices, you have four."

Of course, he said, hedge funds are different. "We have plenty of them," he said. "Losing one is no big deal. Probably half a dozen new ones started today."