• 28 Nov 2012 at 11:49 AM

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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Comments (63)

  1. Posted by Tactics | November 28, 2012 at 11:58 AM

    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. Posted by Cliff Assness | November 28, 2012 at 12:00 PM

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

  3. Posted by Jim Simons | November 28, 2012 at 12:03 PM

    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. Posted by Lowly Assistant | November 28, 2012 at 12:03 PM

    Let's make this happen.

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

  5. Posted by Ooo_la_la | November 28, 2012 at 12:05 PM

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

  6. Posted by Guest | November 28, 2012 at 12:07 PM

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

  7. Posted by Steve to Matt | November 28, 2012 at 12:12 PM

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

  8. Posted by .Bo | November 28, 2012 at 12:16 PM

    I could be wrong here but…

    Richard Hickock : Truman Capote :: Steve Cohen : Bess Levin

    No?

    -Not an analogy quant

  9. Posted by Mexi_Cant | November 28, 2012 at 12:18 PM

    You don't pay lawyers 3/50 for insider trading

  10. Posted by A. Non | November 28, 2012 at 12:25 PM

    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

  11. Posted by Matt L to Steve | November 28, 2012 at 12:29 PM

    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…

  12. Posted by NYCTrader | November 28, 2012 at 12:30 PM

    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.)

  13. Posted by Guest | November 28, 2012 at 12:31 PM

    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

  14. Posted by Guest | November 28, 2012 at 12:32 PM

    A doctor is apparently only $108,000, so I'm guessing a lawyer is probably a little more since they're risking their livelihood… maybe like $115,000?

  15. Posted by Lowly Assistant | November 28, 2012 at 12:32 PM

    You…and your facts, and your intelligence, and your correction.

    Well…just fuck right the fuck off.

  16. Posted by Guest | November 28, 2012 at 12:36 PM

    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

  17. Posted by Guest | November 28, 2012 at 12:46 PM

    Or you could show the examiners two drunk analysts in a room with ticker symbols on a dartboard.

    - UBS Equity Research

  18. Posted by drinking capital | November 28, 2012 at 12:46 PM

    Cows

  19. Posted by Guest | November 28, 2012 at 12:48 PM

    That's real good work.

    - Marlo Stanfield

  20. Posted by Guest | November 28, 2012 at 12:51 PM

    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

  21. Posted by Injun Country | November 28, 2012 at 12:52 PM

    Sons of bitches…There needs to be more cultural sensitivity to our corrupt practices.

    Matt Martoma ( AKA Ajai Mathew Mariamdani )

  22. Posted by Guest | November 28, 2012 at 12:54 PM

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

  23. Posted by Star II Analyst | November 28, 2012 at 12:56 PM

    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.

  24. Posted by PermaGuestII | November 28, 2012 at 1:03 PM

    An Irishman and a Jew walk into a bar…

  25. Posted by gary martin | November 28, 2012 at 1:05 PM

    hes half jew half irish

  26. Posted by Joe | November 28, 2012 at 1:17 PM

    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?

  27. Posted by .Bo | November 28, 2012 at 1:21 PM

    I had to Google Richard Hickock, if that makes you feel any better.

  28. Posted by UBS MBS desk | November 28, 2012 at 1:25 PM

    I might be able to help you with this.

  29. Posted by Sino Forest CEO | November 28, 2012 at 1:29 PM

    heh heh

    well yes and no

  30. Posted by Kanye East | November 28, 2012 at 1:30 PM

    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

  31. Posted by Guest | November 28, 2012 at 1:32 PM

    Agreed.

    - Samuel Israel III

  32. Posted by guest | November 28, 2012 at 1:36 PM

    That only works if you consistently bet wrong / lose money.

  33. Posted by guest | November 28, 2012 at 1:38 PM

    so you think india, sri lanka, pakistan and bangladesh are south EAST asia? okay…….

  34. Posted by UBS Equity Research | November 28, 2012 at 1:51 PM

    …Done!

  35. Posted by Guest | November 28, 2012 at 1:52 PM

    The results is binary, either you traded on MNPI or you didn't.
    Said another way, they don't give a flying fuck if you pick stocks on a dartboard, through research, sacrifices to the gods, or astrology.

    - Guy who feels immense shame for the Wall Street Warriors astrology reference

  36. Posted by Sincere Answer | November 28, 2012 at 1:55 PM

    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.

  37. Posted by Darian' ex | November 28, 2012 at 2:10 PM

    It's not a question of enough, pal…………

  38. Posted by HighFrequencyHater | November 28, 2012 at 2:11 PM

    +1
    Wall Street Warriors doesn't get bought up often enough.

    ~ Guy that knows waitresses make the best traders

  39. Posted by HighFrequencyHater | November 28, 2012 at 2:14 PM

    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.

  40. Posted by BROS ALWAYS WIN! | November 28, 2012 at 2:15 PM

    I guess never loses is a better way of putting it than "always wins," gives you some more wiggle room.

    -Former LEH Binary Outcome Quant

  41. Posted by Ollie | November 28, 2012 at 2:28 PM

    It's a dog pal… What you got besides connections at the airport? Bluestar. What? Bluestar Airlines. They just got a favorable ruling on a lawsuit that, uhh, even the plaintiffs don't know about.

  42. Posted by guest | November 28, 2012 at 2:29 PM

    Well how do you know about it?

  43. Posted by Ollie | November 28, 2012 at 2:29 PM

    I just do…

  44. Posted by Buddy | November 28, 2012 at 2:31 PM

    But why do you have to wreck this company? My father as worked there for 25 years!

  45. Posted by The Rock | November 28, 2012 at 2:50 PM

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

    it doesn't matter

  46. Posted by Kobi Alexander | November 28, 2012 at 2:54 PM

    That is an unfair misrepresentation of an extended beach holiday.

  47. Posted by Darian | November 28, 2012 at 3:04 PM

    Blank stare into brass plated elevator door, with tears…

  48. Posted by Mexi_Cant | November 28, 2012 at 3:05 PM

    Howdy,

    Would you by any chance characterize yourself as petite?

  49. Posted by oki | November 28, 2012 at 3:24 PM

    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.

  50. Posted by Sullivan Cromwell | November 28, 2012 at 3:30 PM

    He's lawyers are not in that category at all.

  51. Posted by US DOJ | November 28, 2012 at 3:46 PM

    "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.

  52. Posted by Guest of a guest | November 28, 2012 at 3:57 PM

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

    "The Zamboni needs a new transmission."

  53. Posted by PermaGuestII | November 28, 2012 at 4:15 PM

    Salmon, Capistrano…

    -L. Christmas

  54. Posted by PermaGuestII | November 28, 2012 at 4:18 PM

    Guess that explains why the French occupied Cambodia.

  55. Posted by PermaGuestII | November 28, 2012 at 4:21 PM

    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.

  56. Posted by BATS | November 28, 2012 at 4:22 PM

    Hey !

  57. Posted by Hell No ! | November 28, 2012 at 4:23 PM

    Was it over when the germans bombed pearl harbor ?

  58. Posted by Guest | November 28, 2012 at 4:37 PM

    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.

  59. Posted by Preet Bharara | November 28, 2012 at 5:30 PM

    Dammit – they're on to me!

  60. Posted by Guest | November 28, 2012 at 5:31 PM

    Suicide is painless, Sammy.

  61. Posted by Clark Griswald | November 28, 2012 at 5:39 PM

    Regular Jelly of the Month Club

  62. Posted by Flo | November 28, 2012 at 10:34 PM

    You know how I know you're gay? You have a rainbow bumpersticker on your car that says, "I love it when balls are in my face".

  63. Posted by Guest | November 29, 2012 at 7:22 AM

    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