The US Securities and Exchange Commission Friday charged SAC founder Steven Cohen with failure to adequately supervise two employees who have been charged with insider trading. Cohen, founder and chief of SAC Capital Advisors, one of the largest hedge funds on Wall Street, did not act on several \"red flags\" that should have led to questions about whether the two senior portfolio managers were acting on non-public information, the SEC said. The two men, Mathew Martoma and Michael Steinberg, both reported to Cohen. Both have been charged by the SEC. The Justice Department has also launched criminal proceedings against the two men. \"Hedge fund managers are responsible for exercising appropriate supervision over their employees to ensure that their firms comply with the securities laws,\" said Andrew Ceresney, co-director of the SEC\'s Division of Enforcement. \"After learning about red flags indicating potential insider trading by his employees, Steven Cohen allegedly failed to follow up to prevent violations of the law.\" The SEC said it would seek to bar Cohen from overseeing investor funds. An order issued by the agency sought an administrative law proceeding. An SAC spokesman said the SEC\'s charges have \"no merit\" and Cohen will \"vigorously\" contest the matter. \"Steve Cohen acted appropriately at all times,\" the SAC spokesman said. \"The SEC ignores SAC\'s exceptional supervisory structure, its extensive compliance policies and procedures, and Steve Cohen\'s strong support for SAC\'s compliance program.\" The SEC\'s civil charges are the latest actions by a US agency against Cohen and his hedge fund related to insider trading charges. Cohen, who long has been in the sights of regulators, has consistently denied wrongdoing. In March, the SEC announced a record $600 million insider trading settlement with SAC affiliate CR Intrinsic to resolve charges that it earned massive profits on confidential information involving the clinical trial of an Alzheimer\'s drug. A second $14 million settlement announced the same day ended charges that a second SAC affiliate, Sigma Capital Management, traded on non-public information about the quarterly earnings of Dell and Nvidia. Cohen, the SEC said Friday, received recommendations on trades from Martoma about an Alzheimer\'s drug jointly developed by Elan and Wyeth that seemed to be based on conversations with a doctor who had provided \"potentially non-public information\" about a drug trial. \"Cohen displayed no concern that Martoma might possess non-public information or about his use of such information to inform investment decisions at his firm,\" the SEC said. \"Instead, Cohen encouraged Martoma to talk further with a doctor familiar with the clinical trial.\" In the Steinberg case, Cohen was looped into a \"highly suspicious\" email about Dell\'s upcoming earnings release. Instead of questioning Steinberg, Cohen liquidated his Dell shares based on Steinberg\'s recommendations, avoiding losses of at least $1.7 million when the earnings disappointed, according to the SEC. The SEC said it will seek to bar Cohen from overseeing investor funds. An order issued by the agency sought an administrative law proceeding.