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Things Could Be A LOT Better At SAC Capital Right Now

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

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63 Responses to “Things Could Be A LOT Better At SAC Capital Right Now”

  1. Tactics says:

    Come on, this is perfect for Steve! He can give the "there's blood on the streets" speech and whack everyone's bonuses, while maneuvering himself out of the Wells with the cash he's saved. Who's going to quit and not have their legal fees paid for?

    I'll believe it's serious when clients pull money out. They're all still on the train until it definitively derails, and they've got at least 5,000 lawyers ready to use themselves as track if necessary.

  2. Cliff Assness says:

    Roosting … Chickens, coming home, pigeons, etc, etc. I know a lot about that.

  3. Jim Simons says:

    Just tell them it's all computerized, they'll never guess it's insider if you throw some math PhD's in a room with the examiners, then you can basically do whatever you want and tell them it's the algorithm. So simple.

  4. Lowly Assistant says:

    Let's make this happen.

    Richard "Dick" Hickock : Steven A. Cohen :: Truman Capote : Bess Levin

  5. Ooo_la_la says:

    Conheeney. Cohen. Lot of C-words holed up in SAC's C-suite.

  6. Guest says:

    I really feel for the guy, you know? Especially during the holidays.

  7. Steve to Matt says:

    You understand if any problems arise, you're out there on your own. The trail stops with you.

    • Matt L to Steve says:

      Chart break-out on this one here! Whitewood-Young Industries…low P/E, explosive earnings, 30% discount from book, great cash flow, coupla 5% holders. Strong management…

  8. A. Non says:

    Mr. Stevie-

    I just wanted to express my sincere condolences and sympathy for you in your current situation. I'll never forget a night several years ago when you came into our fine establishment during the holidays and said "Hey G, why don't you hop on my lap and we'll discuss the first thing that pops up." You were really sweet. As a follow up to that evening, I hope that things with your ex did, in fact, settle amicably. You had mentioned something about "putting her on ice" and made some really funny Zamboni jokes that I didn't fully understand. Anyway, best of luck with your procedings. Also, just to let you know, I once recieved a "well notice" from my OB/GYN after a pretty blackout weekend with some traders that had just been let go from UBS last year; I was actually pretty relieved. That crew made me nervous. So, you really shouldn't sweat this thing too much; I really don't think it's a bad thing! Anyway, just remember that I'll always be here for you.

    XXOO,

    "Gianna"
    Patron Satisfaction Quant, Beamers, Stanford

  9. NYCTrader says:

    Never gonna happen. Large scale criminal investigations are only launched against SE Asian professionals. Most others get a slap on the wrist, easy plea bargains, or are all-together ignored (e.g. "Fabulous Fab", Lloyd "Perjury" Blankfein, Fed's S Friedman.)

  10. Guest says:

    I don't get why this is such a big deal. I've received notices from Wells before. I don't go around announcing it to everyone, I just quickly make the mortgage payment and include the late fee.

    – UBS SEC Compliance Quant

  11. Guest says:

    I opened the doors for you! Showed you how the system works! The value of information! How to *get it*! Fulham oil! Brant resources! Geodynamics! And this is how you fawking pay me back you COCKROACH?

    -Somewhere in Greenwich, CT

  12. Guest says:

    Sometimes I think the game is rigged and there's no use trying, but then I look at John Paulson's recent returns and know that some people still play by the rules

  13. Guest says:

    The absolute worst thing Cohen could hear in the morning is "Bess isn't returning your calls." Hopefully it hasn't come to that.

    • Guest of a guest says:

      "The formaldehyde has gone stinky and the shark needs to be restuffed."

      "The Zamboni needs a new transmission."

  14. Star II Analyst says:

    Q&A Portion of Call: Great quarter, guys. Can you provide a little more color on what you're seeing in terms of trends? Thanks again for taking my question.

  15. Joe says:

    a sincere question why doesn't Cohen run? these guys never run… A man of his assets you can assume has money buried around the globe why not go ala Marc Rich and run off to Switzerland? when the feds come knocking its never ends well…… so even if he only keeps 5% of his wealth but doesn't spend the next 10 15yrs in the pen isn't that the best trade he ever would make?

    • Guest says:

      Agreed.

      – Samuel Israel III

    • Sincere Answer says:

      Because he thinks he has "plausible deniability" and can beat this. Because his kids are in school here. Because running means "they" won and you lost, and SAC NEVER LOSES. Because he has enough money to throw at lawyers who went to schools 10x better than those 25-year-old SEC punks who would sell their left testicle to work for him, and he has a few of their former colleagues up in Legal as we speak. Etc.

    • HighFrequencyHater says:

      Err isn't there a guy that's essentially funding some African government to keep himself out of extradition back to the US? I seem to recall an article about him in the Economist.

      • Kobi Alexander says:

        That is an unfair misrepresentation of an extended beach holiday.

      • US DOJ says:

        "Kobi" Alexander, a, uh hmm, southwest Asian let us say.

        He's still in Namibia fighting extradition, but they took his cash/assets that were in the US. ( SEC civil settlement )
        The US DOJ is still pursuing his extradition. Likely still has money parked there and or Israel.

        • PermaGuestII says:

          Forgot about that guy. He's been there for what, 5 years?

          Namibia f/k/a South West Africa isn't the worst of places to wind up, provided you like the desert.

      • Guest says:

        He's an African prince, right? Pretty sure I sent him money for a wire that never came through. I sure hope they catch that guy.

  16. Kanye East says:

    The Pep Talk (on Sunday of course)
    "I don't know what to say, really. Three minutes to the biggest battle of our professional lives. All comes down to today, and either, we heal as a team, or we're gonna crumble. Inch by inch, play by play. Until we're finished. We're in hell right now, gentlemen. Believe me. And, we can stay here, get the shit kicked out of us, or we can fight our way back into the light. We can climb outta hell… one inch at a time. Now I can't do it for ya, I'm too old. I look around, I see these young faces and I think, I mean, I've made every wrong choice a middle-aged man can make. I, uh, I've pissed away all my money, believe it or not. I chased off anyone who's ever loved me. And lately, I can't even stand the face I see in the mirror. You know, when you get old, in life, things get taken from you. I mean, that's… that's… that's a part of life. But, you only learn that when you start losin' stuff. You find out life's this game of inches" – Any Given Sunday

  17. The Rock says:

    [youtube S8dMJnr6Db8 http://www.youtube.com/watch?v=S8dMJnr6Db8 youtube]

    it doesn't matter

  18. oki says:

    the trial division of the SEC is usually staffed by big law burnouts, so I doubt that Steve has a better legal team. What he probably has is what every major financier has that keeps the legal eagles at bay, the promise of much higher compensated employment once the said legal eagles kids turn 18 and need that 60k a year for NYU Film School.

    Plus, its not like Cohen is some kind of Indian. Seems Preet is only out to take his own kind down.

  19. Guest says:

    Even if they penalised him half his money, he'd still have $7billion to live on. Even if they took away 90% of his money in fines, he'd still have about $2billion left. C.mon SEC! Let's have some fun and pay down some national debt. Fine him $12 billion for kicks