As you may have heard, the last number of months have been a bit tough on hedge fund manager Steve Cohen. In November, one of his former employees, Mathew Martoma, was accused of orchestrating “the most lucrative insider trading scheme ever,” in a criminal complaint in which Cohen was referenced as Portfolio Manager A. A week later, the Times lopped 21,000 square feet off his house. Earlier this month, he had the pleasure of setting the record for the largest insider trading fine ever, at $614 million, a sum that does not even put this whole thing behind him, as the settlement “doesn’t preclude the Securities and Exchange Commission from pursuing Cohen himself in the future.” So you’ll excuse the Big Guy if he felt the need to indulge in a little retail therapy recently. Read more »
art
Worst Abuses Of Unregulated Art Market Look A Lot Like Typical Day In Financial Industry
By Matt Levine
If you like or hate financial regulation you might take a quick look at today’s front-page New York Times article about how the art market is unregulated. Apparently this leads to terrible things like “chandelier bidding,” where auctioneers get the ball rolling by calling out a few fake bids, as well as conflicts of interest involved in third-party guarantees where someone writes the auction house a put on an artwork, is paid a variable commission for that put, and in some cases is allowed to credit that commission against his own bid for the artwork.1 One question you might ask is “why is that bad?”; the answer seems to be that some rich people who go to art auctions pay more for art than they would in the absence of these systems, and then feel vaguely uneasy about it. I think the whole thing disappears in the face of one more iteration of “well, why is that bad?,” but perhaps I am wrong.
There are places where you should think “customers should be protected from various sorts of sharp practices by dealers,” and there are places where you should not think that. I guess? Are there only the former?2 I come from a place that believes deeply in the separation between “sharp practices” and “illegal fraud” and works to keep them distinct. One thing the Times article mentions is that there is a law saying that stores have to display the price of their wares, and art dealers ignore that law, and this is bad for some reason. Try that law on derivatives dealers. One of the main driving forces behind financial innovation is finding novel places to hide fees.
The rest of the art-auctioneer tricks also seem pretty familiar. Imagine an M&A banker who couldn’t bluff, to the one serious bidder for an asset, that he had other bidders waiting in the wings. And of course the financial industry is very familiar with the creative use of options and guarantees to allocate value in ways beyond a headline purchase price. One flavor of that is “schmuck insurance.”3 Read more »
You Can Add The FBI To The (Long) List Of People Impressed With Jeffrey Gundlach’s Brain
By Bess Levin
There is no denying that Jeffrey Gundlach is a hugely talented man whose IQ would rank among the highest in the world if he ever had it tested. “What’s it like having lunch with a genius,” he once asked a colleague, who presumably answered, “To be honest, it’s giving me an inferiority complex just breathing the same air as you, knowing that your brain is the standard for how intelligence will be measured from now until the end of eternity.” Until recently, however, the application of Gundlach’s brilliance was largely confined to bond management. According to a new profile by Bloomberg Markets, though, Gundlach’s intellectual prowess is just as if not more impressive when it comes to crime solving. Read more »
Just a week after putting out an AMBER alert that several of his beloved pieces of art had gone missing during a heist on his home and a mere four days after an emotional press conference pleading with the public to help him find them, bond manager Jeffrey Gundlach’s most prized possessions, after his Sexy Slave KitTM, have been recovered. Read more »
Don’t Overstay Your Welcome: Excusing Himself To Do The Dishes Means You Should Be In The Driveway Already
By Bess Levin
No item is more exclusive than the “Art Connoisseurs’ Evening with Steve Cohen.” For a $25,000 donation to Aspire Giving,” the winner receives an “exclusive tour for two of the Cohen residence in Greenwich, CT,” according to a description sent to registered attendees. “Led by Steve Cohen of SAC Capital Adivosrs, you will be able to view one of the finest and most extensive private art collections of master and modern works ever assembled,” it says. Also included is a “private gourmet dinner for two with Steve and Alexandra Cohen at their residence.” [AR]
Don’t Tucker Yourselves Out On This One Because Next Up Is The “Take A Picture Of Yourself Posing Lewdly With Every One Of Hirst’s ‘Animal-in-Formaldehyde’ Pieces” Challenge
By Bess Levin
Remember how Damien Hirst said he’d never make his meh dot paintings again, forcing their market value to skyrocket? Remember how he then went psyche! and started making dots again, showing them off at 11 simultaneous exhibits in all of the Gagosian galleries? Here’s his latest nifty hustle. If you manage to visit all 11 shows before they close, Hirst will personally give you spots, ahem — “a signed spot print by Damien Hirst, dedicated personally to you.” You have a month to jet set from Hong Kong to Athens to Paris to New York. Go. [ANY via DI, related]
Does anyone have anything they’d like to say to Jon Corzine but have had a difficult time getting in touch? You’re in luck. Geoffrey Raymond, the artist who’s done everyone from Jimmy Cayne, Dick Fuld, Alan Greenspan (collectively known as “The Greats”) to Lloyd Blankfein, Ben Bernanke and, most recently, Lenny Dykstra, has a new painting out. Titled “Corzine Agonistes,” it appears to be Raymond’s commentary on Corzine’s life post-MF Global, in which he develops eczema and gets a bowl cut. But it’s not finished without your help. Read more »
The fund run by Paulson & Co. has purchased a loan to American-art specialist Berry-Hill Galleries for about $10 million, as well as the mortgage on the gallery’s property in an elegant townhouse near the Frick Collection, according to public records and people familiar with the matter…The involvement of the fund, Paulson Credit Opportunities Master Ltd., has in effect rescued the gallery from a precarious position. [WSJ]
Geoffrey Raymond, Wall Street’s artist in-residence, has completed his latest: “Dykstra, Nailed.” Read more »
The last several years have not been the greatest in the life and times of Jim Cramer-endorsed investor Lenny K. Dykstra. The bumps are too numerous to mention in full but include: falling on money troubles so serious that he was no longer able to fly private, having his beloved mansion foreclosed on, leaving the place “pockmarked with torn up flooring, missing toilets and holes in the walls,” filing for Chapter 11 bankruptcy, living in his car, suing JPMorgan for “predatory lending practices,” dropping his suit against JPMorgan, invoking the ire of a hooker to whom he wrote a bad check, and being indicted on bankruptcy fraud and obstruction of justice charges. The latest setback, which could result in 80 years behind bars for LD, was pretty tough to take, as it will presumably make the timeline for his “comeback” a bit longer (although LD, bless his heart, says that not only is he “back” but that he’s worth hundreds of millions of dollars, at this moment in time). Rather than wallow in sadness, however, we decided to pull ourselves (and yourselves and LD) out of this emotional hole by celebrating the life of Nails. In portrait form. Read more »
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