Jan 18 (Reuters) - Hedge fund titan Steven A. Cohen is once again in the spotlight over allegations of improper trading at his $14 billion SAC Capital Advisors.

The arrest on Wednesday of technology analyst Jon Horvath marks the fourth time in two years that U.S. authorities have implicated or charged a person with engaging in insider trading while working at SAC Capital. It is the latest to come from an investigation FBI agents have coined Operation Perfect Hedge.

Federal authorities did not charge Cohen or SAC Capital with any wrongdoing in the case against Horvath, who is accused of using inside information to help the Stamford, Connecticut-based hedge fund generate a $1 million profit from trading in shares and option contracts of PC maker Dell Inc.

Horvath's lawyer could not immediately be reached for comment.

The case against Horvath comes less than a month after SAC Capital capped another successful year, generating an 8 percent return while most hedge funds lost money in 2011.

But the new allegations of improper trading are a fresh reminder that SAC Capital remains a major focal point for U.S. prosecutors as they continue a multi-year crackdown on insider trading in the $1.7 trillion hedge fund industry.

And while industry observers and investment managers say the newest case is not likely to prompt investors to rush to pull money from Cohen's fund, it could cause some discomfort for some of his wealthy patrons.

"There is a feeling that the Feds' web around Cohen might be slowly tightening and that is bound to get people to think about what to do with their money," said one industry investor familiar with Cohen's fund but who asked not to be named.

A spokesman for Cohen's SAC declined to comment beyond saying that the firm is continuing to cooperate with the government investigation.

It is no secret in the hedge fund world that the federal authorities have been probing possible wrongdoing at SAC for years. Reuters previously has reported federal prosecutors and regulators have been investigating allegations of improper trading at SAC Capital since at least 2007.

But it was not until last year that those years of investigation began to get uncomfortably close for Cohen when two former traders, Noah Freeman and Donald Longueuil, pleaded guilty to insider trading charges. Another former SAC Capital employee, Jonathan Hollander, settled civil charges of insider trading with the Securities and Exchange Commission.

Now that a fourth SAC Capital employee has been accused of improper trading, hedge fund industry analysts, lawyers and investors say the scrutiny of Cohen's roughly 800 employees is bound to increase.

"I suspect that remaining with a fund that's implicated is just bad business from a reputational standpoint," said Nicole Boyson, a finance professor at Northeastern University, who has researched the implications of hedge fund fraud.

Over the years, SAC Capital, in response to other trading scandals, has noted that it has some of the strongest compliance systems in the hedge fund industry. But in a deposition taken last year in a civil lawsuit, a copy of which was obtained by Reuters, Cohen said federal laws on insider trading were "very vague."

To be sure, Cohen, a 55-year old trader who founded SAC Capital in 1992 with just $25 million, continues to maintain a large reservoir of support. And a good deal of that stems from the fact that Cohen himself has never been charged with wrongdoing and that despite the negative headlines, SAC Capital continues to post strong returns.

"It is unfortunate, but I do not think Steve is involved with this and, yes, we have money with him and I stand by him," said Anthony Scaramucci, who runs Skybridge Capital which featured Cohen as a prominent speaker at his investment conference last year.

The improper trading Horvath is alleged to have engaged in occurred at Sigma Capital, a division of SAC Capital that is based in New York City. Horvath reported to Michael Steinberg, a long time top trader with SAC Capital, who talks frequently to Cohen, according to people familiar with the matter. Steinberg could not be reached at his office on Wednesday.

Ron Geffner, a partner at law firm Sadis & Goldberg, which specializes in representing hedge funds, said just because some employees at a fund are doing something wrong, it is incorrect to infer "that their employer put them on a path of bad decision-making."

Others also note that for hedge fund investors, solid performance counts for more than anything. These people say investors will put up with a lot of bad behavior at a hedge fund as long as the returns are good.

Still, the new charges come at an awkward time for Cohen, who has expressed some interest in submitting a bid to buy the financially strapped Los Angeles Dodgers professional baseball team. A spokesman for Major League Baseball said it is premature to discuss the sale because the deadline for submitting bids is still open. One of the many factors considered in vetting prospective buyers of teams is their business practices, a person familiar with the process said.

One of the biggest investors with SAC Capital is an investment fund managed by Blackstone Group Inc., sources have told Reuters. Blackstone's investment advisory arm is running the sales process for the Dodgers. A Blackstone spokesman did not immediately return a call seeking comment.

(Reporting by Svea Herbst-Bayliss and Katya Wachtel; additional reporting by Jennifer Ablan)

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