Amidst the brouhaha of the insider trading investigation, the SEC filed an action on Friday seeking a lifetime ban against SAC Capital founder Steve Cohen. If successful, Cohen would never be allowed to touch investor funds again. In a somewhat ironic twist, the basis of the SEC action is Cohen's "failure to supervise" SAC employees.
The SEC alleged the 57-year-old financier ignored signs of illicit trading by star staffers and instead traded personally on their advice. The agency alleged the trading resulted in hundreds of millions of dollars in profits and avoided losses for Mr. Cohen and the firm.
The regulators want this guy so bad it's unbelievable. Just to give you an idea of how really...bizarre...this filing is, it's something the SEC usually uses to censure an errant branch manager at a bank when one of the bank employees goes rogue on some little old lady's annuity. Failure to supervise is not what you'd expect to see the head of one of the world's largest hedge funds slapped with. That's almost GMAFB.
But Stevie really has these guys pissed off. And you can only rub the baller lifestyle in a government employee's face for so long before they find some way to screw you.
Mr. Cohen's professional success has fueled an opulent lifestyle even by the standards of the hedge-fund industry, with a sprawling mansion in Greenwich, a $60 million oceanfront property in Long Island's East Hampton and one of the top private art collections in the world. His decision to keep buying trophy properties, even as his former employees and firm were facing charges, privately irked government officials, according to people familiar with the matter.
So there you have it, boys and girls. Cohen may have no choice but to make SAC a family office. If the SEC has their way, he couldn't get hired as a janitor in a public firm.
Anyone else get the feeling that going after Cohen for "failure to supervise" is kind of the same thing as going after Al Capone for tax evasion?
He has so much money, I'm a little surprised he didn't return investor capital a long time ago. Clients are probably the least fun part of the business.
Honestly, other than the potential hit to reputation, this isn't so bad for Cohen. He still gets to keep his money and isn't doing time.
Just to be clear, he's not out of the woods from a criminal standpoint. This was just filed to get him out of the business. All the criminal stuff is still pending.
http://dealbreaker.com/2013/07/steve-cohen-had-instant-messenger-debate…-trading/
Analysts instant messaged Cohen saying they had talked to a doctor who had inside knowledge about the drug trial, and SAC incorporated this knowledge into its trades.
Yeah, judging by these messages, it should be only a matter of time before the SEC takes criminal action against Cohen. Unfortunately, I have a feeling the criminal charges are going to be wasted on the firm instead.
"Anyone else get the feeling that going after Cohen for "failure to supervise" is kind of the same thing as going after Al Capone for tax evasion?"
Yes. That's exactly what it is. Also, I can't quote anyone, and I've raised the issue already, so I'm resigned to excerpting. Freaking IE8 POS workstation
Thing is, as far as amount of damage to the public goes, they've got the wrong guy. I am not condoning insider trading, it just seems to me that they could have put this type of effort into fucking Angelo Mozillo in the ass, or the dudes at Magnetar, or John Paulson, or GS's CDS structuring desk. I'm inclined to think they're going after him simply because he's a high visibility target and want to make an example of someone.
Remember how, long long ago, the gov't twisted the arm of big media to cover some Trayvon case in order to call attention away from the Bradley Manning trial? That's just what this looks like. Fact is, the gov't is still in bed with the financial industry and they're not fooling anyone.
Why Cohen doesn't pull a Marc Rich and fly the coop kind of confuses me. I would. Even if I were innocent I would, it seems the gov't wants someone to be guilty for something and as the saying goes "I didn't say it was your fault, I'm taking it out on you."
Blows my mind when any HF or private office would allow IM or anything of the sort. Every dumb message sent will be misconstrued and twisted by the government looking to make an example of someone.
Gotta love how regulators were "irked" at a private citizen going about his life.
I think the real question now is which gang will he join once he's in the slammer. Given that he's already bald...
LOL. I don't think I like where that train of thought is headed. His last name is Cohen, after all.
I like to think that Jews have more in common with black people in prison than the white supremacists. Hard to say though.
Because he's betting that he is above the law. I suspect there's a decent probability he is, as insider trading lawsuits are mostly political - cf Milken, another middle class Jew who rose to great riches and was shot down for daring to do so. Unlike in Milken's days, I don't think an election would depend on this lawsuit; still, it would explain why a lavish lifestyle would paint a target sign on the guy's head.
I agree that Mozilo ought to be in jail. When you make hundreds of millions out of outright, systematic fraud with the clear intention of screwing vulnerable people illegally, and then get to retire in a large mansion as your "financial institution" that you sold off for top dollar is sinking one of the largest, stablest banks in the world, it sends a pretty clear signal about the effectiveness with which the rule of law is enforced in the USA.
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