SEC Files to Ban Cohen for Life

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?

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