For the ten SAC Capital employees who have been convicted of securities fraud over the last several years, the results of the government’s crackdown on insider trading are obvious: time in the big house, fines, and the dream of being being honored as a distinguished alumni of Stanford Business School dashed. For SAC founder Steve Cohen, too, the impact is clear: no more outside investors, a new layers of management– a cocoon, if you will– between him and his traders, and a giant metal ‘S’ ‘A’ and ‘C’, which once graced the wall of the firm’s lobby rendered completely useless.
For another group of people, though, the effect of multi-year investigation is less clear: the hundreds of SAC employees who did not engage in insider trading. Specifically, what having the hedge fund soon to formerly be known as SAC Capital on their resumés means for their professional lives and long-term career plans. Would it be the equivalent of a scarlet ‘S’ on their chests? Would hiring managers blow them off in a “seat’s taken” kind of way? Would they have to burn their fleeces and any other evidence of having once been associated with the firm? Would they stand in the shower scrubbing their skin raw in an attempt to get the SAC stench out, after a particularly unpleasant meeting with a potential employer who announced flatly that he could “still smell them on [you]”? Would they have to leave town, and start over in a place where no one had ever heard of SAC Capital?
According to this guy, no:
“There were people there who did the wrong things and it seems to have been an aggressive culture,” Mr. Balyasny said in a conference call last month with investors in his Balyasny Asset Management. “Quite a number of people are completely clean and had no contact with the messiness that was going on.” The messiness Mr. Balyasny alluded to was SAC’s guilty plea in November to securities fraud and the insider trading guilty pleas and convictions of eight people who once worked for the firm. To date, Mr. Balyasny’s firm has hired three traders who previously worked in SAC’s office in London, which was shuttered late last year.
In the aftermath of the SAC guilty plea, there has been a lot of whispers in the $2.4 trillion hedge fund industry about an “SAC taint,” which would prevent the firm’s traders and analysts from getting another job. But so far, the taint has not emerged as a real problem, with hedge funds like Mr. Balyasny’s firm as well as BlueCrest Capital Management and Moore Capital Management all hiring people who used to work for SAC.