Since Mathew Martoma, the hedge fund manager at the centre of the biggest alleged insider trading case in history ($275 million) was arrested, speculation has run wild that his boss SAC Capital’s Steve Cohen, will eventually fall as well.
Cohen is mentioned as ‘Portfolio Manager A’ in the complaint against Martoma, putting him very near the alleged criminal activity.
Bloomberg columnist Bill Cohan believes that this likely means that Preet Bharara, the U.S. Attorney who has already won around 70 convictions for insider trading, is getting close to the great catch that is SAC’s main man.
Bharara and his team did, after all, spend a year trying to get Martoma to flip on his employer.
The question to Cohan is, however, is this worth all the money and trouble? From Bloomberg:
If Cohen and his firm are nothing more than a criminal enterprise engaged in widespread insider trading, then Bharara is absolutely right to spend his time and his office’s resources going after them. Insider trading is justifiably illegal because the proper functioning of the capital markets depends on people having confidence the market is not a rigged game.
The bigger question for government prosecutors, though, is why none of the traders, bankers, or executives at the Wall Street banks who caused the 2008 financial crisis has been brought to justice. After the savings and loan scandal of the 1980s, some 3,500 bankers ended up criminally prosecuted and behind bars. This time around, no one on Wall Street has done jail time. In a June 2011 speech, Bharara said, “We too want to hold accountable anyone who deserves to be punished. … Any case we make, however, will be because it is appropriate and deserved, not because there is overwhelming public pressure to do so.”
Cohan’s bottom line: If you’re going to go after the bad guys, don’t pat yourself on the back until you go after all the bad guys.