Can u say PIECE OF SHIT! Whoever said fraud doesn't pay or the fraudsters pay, they throw parties instead .
July 28 (Reuters) - Hedge fund billionaire Steven A. Cohen did not
let the filing of criminal charges against his $14 billion SAC Capital
Advisors get in the way of a party this weekend at his vacation estate
in tony East Hampton, New York.
night party at Cohen's 10-bedroom home on Further Lane took place two
days after federal prosecutors in New York announced a five-count
criminal indictment against SAC Capital that portrayed the 21-year-old
Stamford, Conn.-based fund as a breeding ground for unlawful insider
The lavish affair, which one source said
included delivery of $2,000 worth of tuna from a local fish store to
Cohen's home, was planned before the charges were filed. A person
familiar with the event said the party, attended by a few dozen people,
was intended by the 57-year-old manager to show support for ovarian
cancer research, though it was not a fundraiser.
Friday, lawyers for SAC Capital entered a not guilty plea to the
charges. Some in the hedge fund industry said a fierce determination to
carry on business as usual was behind Cohen's decision to go ahead
with the bash at his 9,000-square-foot home on a street famed for its
Cohen, whose estimated
fortune is $9 billion, set up shop in 1992 with just $25 million and
earned a reputation as of the greatest stock traders of his generation.
His firm has posted a 25 percent average annual return, one of the
best performance track records in the $2.4 trillion hedge fund
industry, despite charging investors some of the highest fees.
Capital, after the indictment was announced, sent an email to
employees and investors saying the firm would operate as normal. It
stressed that prosecutors did not intend to take any action that would
imperil the firm's ability to return some $4 billion in outside
investor money by year's end.
RARE MOVE RAISES QUESTIONS
a rare move for federal prosecutors to indict a corporation, and it
remains to be seen just how long Wall Street banks that lend money to
SAC Capital and trade with it, will continue to do.
also remained to be seen whether Cohen, who faces no criminal charges
himself, can keep his hedge fund empire together as a fully functioning
firm employing nearly 1,000 people, with offices in eight cities
around the globe.
And it was unclear whether
Cohen's more than 500 investment professionals, traders and analysts,
will remain with the firm as the criminal proceeding unfolds. Investors
have asked to withdraw most of the $6 billion in outside money the
fund managed at the beginning of the year.
would be running for the hills and looking for a job now if I were an
SAC employee" said Mark Jordan, a veteran wealth management recruiter.
"Who in their right mind would put money in SAC again?"
review of LinkedIn profiles for more than a dozen SAC employees
revealed that some have been connecting through the online networking
site with Wall Street job recruiters.
recently, headhunters had said they were not seeing a flood of resumes
from SAC employees, even after U.S. securities regulators filed a civil
administrative complaint against Cohen on July 19 for failing to
supervise two employees charged by prosecutors with insider trading.
of early last week, SAC Capital was still interviewing candidates for
clerical positions and junior trading and analyst jobs, according to
headhunters and an SAC Capital employee, who declined to be identified.
July 23, the firm posted a job opening on its website to fill a
position in its 15-member controller's team, which is responsible for
analyzing the firm's daily profits and losses from trading hundreds of
stocks and bonds.
In the months before the
indictment, the mood at SAC Capital's New York office had been good,
according to a person who works there but declined to be identified.
had tended to discount the possibility of federal prosecutors filing a
criminal charge against SAC because the investigation had been going
for at least seven years.
PERFORMANCE BETTER THAN INDUSTRY'S
employees rallied around the fact that SAC Capital's main portfolio
was up about 11 percent for the year as of mid-July, compared with a
3.2 percent return for the average hedge fund through the end of June.
The exceptional performance was seen as ensuring top traders and
analysts who remained with SAC Capital would be on target to get
handsome year-end bonuses.
Those rich year-end
pay packages, a byproduct of SAC Capital's long success, is one thing
that has earned Cohen loyalty from employees, even after they have left
But the mood darkened at SAC Capital
on Thursday in the wake of the criminal indictment, said people
familiar with the firm. There's worry that despite Cohen's intention to
continue trading, he could be forced to eliminate jobs if Wall Street
firms stop providing financing to enhance trading positions.
indictment, which alleges unlawful trading took place at SAC Capital
for at least a decade, has cast a shadow on Cohen's legacy and raised
questions about the firm's track record.
hardly know Stevie Cohen, but he was a great money manager for a long
time. How he did it, I really don't know," said hedge fund pioneer
Michael Steinhardt on Wednesday, as word of the imminent indictment was
spreading across Wall Street.
For now, one Wall
Street executive said the firm's half-dozen prime brokerage firms are
taking a wait-and-see attitude about eliminating lines of credit to SAC
Capital or boosting collateral posting requirements for trading
positions. The executive said the sense is that if one big Wall Street
firm decides to cut ties with SAC, most other firms will follow suit.
scenario could force quick liquidation of some positions. The firm
lists its regulatory assets at about $50 billion, a figure that
reflects the use of leverage, or borrowed money, to enhance the trading
prowess of its $14 billion in capital, of which more than $8 billion
comes from Cohen and his employees.
regulatory document, SAC Capital says some of the firm's "investments
in securities are also conducted on a highly leveraged basis, including
through the use of options." If SAC Capital was cut off from using
borrowed money, it might not only force a liquidation but limit the
ability of the firm to generate the kind of profits it has regularly
Still some on Wall Street believe that
if big Wall Street firms were to cut ties with SAC Capital, smaller
firms might be ready to step in and fill some of the financing gap.