Back in October, we detailed a list of things that, if you are the hedge fund manager who goes by the name Steven A. Cohen, you really don’t want to hear first thing in the morning. They included: “The fleeces are on back order”; “Your ex-wife is in the lobby”; “There’s a photographer here who said he’s been authorized to shoot you wearing a king’s robe and crown for a set of playing cards”; and “You’ve been outmaneuvered for the Toledo Mud Hens. But I hear the Binghamton Mets may be available.” Today we must update that list to include another thing, perhaps THE thing, that people delivering news to Cohen don’t want to relay. Paraphrasing but any variants on: “Mr. Cohen, we’ve received a Wells notice and by the way, they’re considering naming you personally.”
SAC received the notice last week, Tom Conheeney, the firm’s president, told investors on a conference call today during which the firm discussed the Nov. 20 arrest of a former SAC portfolio manager, Mathew Martoma, for alleged insider trading while at SAC. Cohen, who opened the call, said he acted appropriately when he traded shares of the drugmakers four years ago on recommendations from Martoma, according to two of the people. Trades in the shares by Martoma are at the center of what prosecutors call the biggest insider-trading scheme…U.S. Securities and Exchange Commission investigators are considering fraud and control- person claims against Steven Cohen, the billionaire founder of SAC Capital Advisors LP, after signaling they intended to pursue related sanctions against his firm, a person familiar with the matter said.
According to CNBC, investors were also told that any possible civil charges, “would not materially increase SAC’s financial exposure in the ongoing legal investigation,” and that whatever legal fees may be incurred will be picked up by Cohen, not clients. Conheeney also assured investors that SAC expects they will “still feel comfortable” with the firm once all the “facts” emerge, though there would be no hard feelings “if that were not the case.” Employees, too, have doubtlessly been given some sort of pep talk, though needless to say, the mood around 72 Cummings Point Road is probably feeling a bit less merry than in years past, when the period between Thanksgiving and New Year’s was a joyful time of holiday parties, bonuses, and a night of revelry at Hula Hank’s. The office party and bonuses are presumably (maybe? hopefully?) still happening, but with Hank’s closed and no Big Guy dressed as Santa delivering Christmas-themed insults– cancelled on account of being too jolly– you’ve got figure spirits are quite to very low. And that a little class field trip to a certain Stamford gentlemen’s club might be in order.
SAC Tells Investors to Not Worry, But ‘We Get It’ [CNBC]
SAC Is Said to Tell Clients That It Received Wells Notice [Bloomberg]
SEC Said to Consider Claims Against Cohen After SAC Wells Notice [Bloomberg]
SAC Warns Of Potential SEC Case [WSJ]
Earlier: Things Could Be Worse But They Could Also Be Better At SAC Capital Right Now; Investors Don’t Want Their Hedge Funds To Get Caught Insider Trading; CR Intrinsic PM Arrested On Insider Trading Charges Can Take Solace In Knowing He Is Peerless In His Field