The soon-to-be-$3.5 billion-lighter Steve Cohen, were he guilty of knowingly trading on insider information from Martoma, would seem to have a lot of good reasons to want to keep him happy. But he fired him. And, now, Bloomberg‘s Jonathan Weil has put two and two together. Read more »
Why does there seem to be more insider trading than there used to be? My assumption was always to the effect of “because now we look for it and have computers and stuff,” but James Surowiecki has a column today saying in part “no, actually, there’s more insider trading”:
The S.E.C.’s enforcement actions have been on the rise as well, and the past three years saw more of them than any other three-year period in its history. Andrew Ceresney, the co-director of enforcement at the S.E.C., told me, “We’ve gotten better at detecting illegal activity, and at using technology that allows us to draw connections and see patterns.” But this isn’t just a case of vigilant policing giving the impression of a rise in crime; a number of studies of market-moving events have documented a boom in “suspicious activity” (that is, more trading than usual) around those events.
Loosely speaking what this tells you is: Read more »
What is the point of prosecuting a company? Sometimes they pay fines, that’s something. A criminal conviction against a company may keep that company from doing bad things in the future. As a prosecutor, you get to say “this prosecution proves that no company is too big to jail,” despite the fact that a company is the exact and literal embodiment of a thing that is too big (and too abstract) to jail. So, there’s some stuff.
The point of prosecuting a human is to punish that human for doing bad stuff and deter other humans from doing similar bad stuff in the future, and prosecuting companies doesn’t do a great job of that. Prosecuting companies tends to both over-deter and under-deter: “if I commit a crime in my corporate capacity, my company will disappear and I’ll be out of a job” doesn’t have quite the same sting as “… and I’ll go to prison,” though it does have exactly the same sting as “if someone else at this company commits a crime in his corporate capacity, my company will disappear and I’ll be out of a job.”
Is (or was) SAC Capital organized to encourage individual analysts and portfolio managers to get inside information while shielding Steve Cohen from direct knowledge of that information? Meh, I don’t know, but man do a lot of people think so.1
Was that kind of what its investors wanted? Even today you can read about how investors are voluntarily fleeing SAC, or planning to, because “[e]ven Cohen’s legendary 25 pct annual returns at some point aren’t worth the risk,” but still: what risk? “At least nine current or former SAC employees have been linked to insider trading while working at the firm, including four who have pleaded guilty to crimes, according to Bloomberg News’s tally.” I submit to you that if you don’t want to be associated with insider trading, six cases would be enough. If nine isn’t enough, ten won’t be either. It seems like at least some investors are only going to be dragged away from SAC by force.
After five years under investigation for insider trading, Steven Cohen is considering proposing a deal to prosecutors that would shut his $15 billion hedge-fund firm to outside investors, according to a person familiar with his thinking. Cohen has discussed an agreement under which his SAC Capital Advisors LP would admit wrongdoing but wouldn’t be prosecuted unless it broke the law again, said the person, who asked not to be named because the talks are private. As part of the deal, known as a deferred prosecution agreement, Cohen would close the Stamford, Connecticut-based firm to outside investors and make it a family office that manages his personal fortune. SAC Capital probably would also pay fine. [Bloomberg]
SAC Capital Will No Longer Provide Investors With Updates On Its Unconditional Cooperation With The Government’s Investigation, Which Oh, By The Way, Ain’t So Unconditional AnymoreBy Bess Levin
SAC Capital Advisors, the hedge fund owned by the billionaire investor Steven A. Cohen, told its investors on Friday that it was no longer cooperating unconditionally with the government’s insider trading investigation. “In the past we have tried to be as transparent with you as possible about the state of the investigation while balancing our desire for transparency with the need to keep the details of a sensitive investigation confidential,” said the letter. “While we have in the past told you of our cooperation with the government’s investigation our cooperation is no longer unconditional and we do not intend to give updates in this area going forward.” [Dealbook]
For many people, prison is a terrible place that breaks their spirit and turns them into a shell of the person they once were. They grow bitter. They harden. Their looks take a hit. Two people for whom time in a correctional facility actually seems to have served them quite well? The currently incarcerated Raj Rajaratnam, who is said to be in quite “good spirits” and looking fantastic, to boot, and the recently released (early for good behavior) Danielle Chiesi, who looks GOOD and feels GREAT. Read more »