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Ed’s note: A previous version of this story included a picture of a woman incorrectly identified as Wendy Cohen Schimel.
As you may have heard, the US government is putting on a holiday spectacular this year called Insider Trading Fest(ivus) 2010. Capping a three year investigation, charges that “could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the nation” are said to be coming any time between now and early next year. Yesterday, Greenwich-based Level Global and Stamford-based Diamondback Capital Management, both headed by SAC Capital alums, were raided by the FBI. The Bureau also recently dispatched two hired guns to an analyst’s home, where they asked him to wear a wire while having a conversation with “this guy” they told him they were going after, that “guy” being someone at SAC, which follows last year’s unsuccessful attempt to get former SAC analyst-cum-informant Choo Beng Lee rehired in order to record chats with noted individuals there. Securities law professor John Coffee told Bloomberg those approached by the feds and asked to cooperate “will get greater leniency if they [deliver] a bigger fish” and while it may be premature to jump to conclusions, the Nancy Drews among us might infer the government has its eye on one fish in particular!
So, let’s just cut to the the chase– in a conference room at FBI HQ’s, you will (most likely) find a bulletin board with a photograph of Steve Cohen in the middle, surrounded by a web of smaller pictures of various people who he previously and currently does business with, with little strings linking everyone.
Mr. Cohen, of course, has not done anything illegal that we know of, but the FBI needs a big kill. And having been unsuccessful in nailing him for anything so far, they’re now getting desperate and attempting to pit blood against blood (by marriage). One of the three SAC alums who founded Diamondback, Rich Schimel, pictured, is not just a former employee of Steve’s but his current brother in law (who is married to SC’s sister, Wendy). We’re told that around the time Schimel left to start Diamondback (along with Lawrence Sapanski and Chad Loweth), he and Steve had a falling out, and it’s unclear if the relationship was repaired in the ensuing years. But if we know the government– and I think we do!– they’re banking on bad blood. The sort of blood that would get someone to show up at Thanksgiving wanting to make all nice-nice and asking his B in the L to lean in a little closer while they have a heart to heart.
But the feds have underestimated this familial bond– Schimel is no Fredo (besides which- even if Rich did wear a wire, there’s nothing improper to overhear. The only hot tip they’ll be privy to is SC’s stuffing recipe).