Steve Marcus / REUTERS Hedge-fund manager Steven A. Cohen, founder and chairman of SAC Capital Advisors, listens to a question during a one-on-one interview session at the SkyBridge Alternatives Conference in Las Vegas on May 11, 2011.

Wall Street hedge fund titan Steven A. Cohen is reportedly poised to avoid federal insider trading charges because U.S. prosecutors don’t believe they have enough evidence to bring a case against the billionaire financial mogul. The anti-climactic dénouement to the federal government’s multi-year investigation into Cohen, and his firm SAC Capital, is a striking setback for the politically ambitious Manhattan U.S. Attorney Preet Bharara, who has made insider trading his signature law enforcement mission.

“Steve Cohen is the Teflon Don of Wall Street,” said Bill Singer, a partner at New York–based securities-law firm Herskovits and a veteran Wall Street defense attorney. “Unless you have a smoking gun, like a phone conversation or an informing witness, these cases are very difficult to prove. Bharara may think that Cohen is guilty, but the burden of proof is ‘beyond a reasonable doubt.'”

Although Cohen appears set to avoid criminal charges, his multi-billion dollar hedge fund empire has taken a significant blow, thanks to the federal investigation. Since the beginning of the year, several SAC clients have sought to withdraw more than $5 billion managed by Cohen’s $14 billion hedge fund, according to The Wall Street Journal. Still, Cohen retains at least $8 billion of his own money in the fund. And once the dust settles, some clients may return to SAC. “If there is no criminal prosecution, the money may come dribbling back,” said Singer.

(MORE: SAC Capital: Feds Are Probing Insider Trading Scandal)

The U.S. government has been investigating SAC Capital for several years, but the feds don’t believe they have enough evidence to bring criminal charges against Cohen, according to the Journal. Last November, the U.S. charged one of SAC’s former portfolio managers, Mathew Martoma, with orchestrating a $276 million insider trading fraud. Martoma is charged with trading illegally on information he obtained from a University of Michigan doctor involved in an important pharmaceutical drug trial in 2008. Martoma was a SAC investment portfolio manager, reporting directly to Cohen.

When the FBI showed up at Martoma’s Florida mansion last fall, the Stanford Business School graduate fainted on his front lawn. But the feds apparently have thus far not succeeded in convincing Martoma to testify against Cohen, his former boss, ahead of a five-year July statute-of-limitations deadline to bring charges against the hedge fund mogul. Martoma has pleaded not guilty to insider trading charges and is set to go on trial in November. He faces decades in prison for what the feds have called the largest insider trading scheme in U.S. history. Martoma’s alleged fraud resulted in $276 million in ill-gotten gains for SAC. Throughout the probe, Cohen has maintained his innocence.

On Wall Street, Bharara’s pursuit of Cohen, one of the most famous hedge fund operators in the country, has been compared to Captain Ahab’s quest to vanquish the White Whale. Bharara’s ongoing investigation into insider trading in the hedge-fund industry has already led to the convictions of former Galleon Group founder Raj Rajaratnam and former Goldman Sachs director and McKinsey managing director Rajat Gupta. Rajaratnam is currently serving an 11-year prison sentence, and last year Gupta was sentenced to two years in prison.

(MORE: Are the Feds Closing In on Billionaire Hedge-Fund Mogul Steven Cohen?)

Cohen was never charged or even named in any federal criminal or civil complaint. But court documents unsealed last fall refer to him as the “Hedge-Fund Owner” of two hedge-fund affiliates involved in Martoma’s alleged scheme. At one point, the FBI reportedly wiretapped Cohen’s Connecticut home. In March, SAC Capital agreed to pay a whopping $616 million penalty to the SEC to settle the insider-trading civil case, without admitting or denying guilt. Although he appears poised to avoid criminal charges, Cohen could still be hit with additional civil charges. Reached by TIME, a spokesperson for SAC Capital declined to comment.

Since taking office in 2009, Bharara has charged more than 70 people with insider trading and obtained nearly as many convictions or guilty pleas. (Last year, TIME featured Bharara in a cover story and later named him to the TIME 100.) On Wall Street, Bharara is viewed as politically ambitious, and is occasionally mentioned as a possible successor to U.S. Attorney General Eric Holder.

Singer said Bharara’s failure to pin charges on Cohen is a setback, but won’t ultimately hamper his political rise. “Preet’s not shy about prosecuting anyone for insider trading, but it’s to his credit that he realized that he doesn’t have enough evidence to charge Cohen,” said Singer, who has spent decades on Wall Street as both a regulator and attorney. “He’s done a phenomenal job on behalf of the public. This case doesn’t really hurt his political future, because he’s already left a very admirable record.”

As for Cohen, the reclusive hedge-fund titan will no doubt be breathing a sigh of relief. Last month, faced with a grand jury probe, Cohen’s lawyers informed the government that their client would invoke his Fifth Amendment right against self-incrimination. “Steve Cohen is very resilient,” said Singer. “He has more lives than a cat. He’s a cold-blooded, calculating guy, and now we know why he’s so successful. Without enough evidence to prosecute him, the feds may be saying to him: ‘Leave the gun, take the cannoli.'”