NEW YORK (REUTERS) - A United States appeals court has revived a lawsuit by the former wife of Steven Cohen, founder of hedge fund SAC Capital Advisors, who accused the billionaire of hiding US$5.5 million (S$6.8 million) from her during proceedings that led to their 1990 divorce.

The 2nd US Circuit Court of Appeals in New York said a lower court had erred in dismissing fraud-based claims by Ms Patricia Cohen, who sued her ex-husband in 2009. The appeals court also revived claims of racketeering and breach of fiduciary duty, while upholding the dismissal of an unjust enrichment claim.

"I'm delighted," Mr Howard Foster, a lawyer for Ms Cohen, said on Wednesday. "It looks like the court agreed with us on all the major issues."

Writing for a three-judge panel, Circuit Judge Pierre Leval said Ms Cohen had made a "plausible" allegation that Mr Cohen had concealed the US$5.5 million during negotiations on a separation agreement in 1989, which preceded the divorce. He noted that the court's decision did not address whether Ms Cohen's fraud claims had merit.

"This is a procedural ruling and not a ruling on the merits," said Mr Jonathan Gasthalter, a spokesman for SAC Capital Advisors. "As we have said from the outset, these decades-old allegations by Mr Cohen's former spouse were patently false and entirely without merit. We will continue to defend against them vigorously."

Wednesday's decision marks another legal setback for Mr Cohen, whose hedge fund has been embroiled in a broad federal investigation of insider trading.

On Friday, prosecutors charged Mr Michael Steinberg, a veteran SAC portfolio manager at the firm, with insider trading. Last month, the firm reached two settlements totalling nearly US$616 million with the US Securities and Exchange Commission, without admitting or denying wrongdoing. The smaller settlement has won court approval.

The divorce case revolves around a US$9 million real estate deal that Mr Cohen had pursued through an entity called SAC Trading. Ms Cohen alleged that her ex-husband had invested the money to buy New York City real estate in early 1986, only to be told later that year by Mr Cohen and his brother, co-defendant Donald Cohen, that the money was lost.

In fact, she said US$5.5 million of the money had been returned to her ex-husband by January 2007, and he eventually claimed to have written off the entire investment.

She said this eventually caused him to value his net worth as of 1989 at less than US$8.2 million.