Here’s a fact likely in the back of Steve Cohen’s mind: Manhattan U.S. Attorney Preet Bharara’s office has won convictions or guilty pleas in 100% of presented cases.
And regulators are even more eager to sound the death knell for Cohen’s elusively profitable SAC, a $13.9 billion hedge fund (of which $7.5 billion is Cohen’s own fortune).
For regulators, the case has been years in the making.
The government — which will likely seek to bleed the company through unprecedented restitution and fines — argues that SAC’s insider trading scheme dates back to 1999.
It wasn’t long after that SAC emerged on regulators’ radar.
The regulatory inquiry, which began almost two years ago, centres on whether information from Ms. Becker’s firm, Lehman Brothers, was made available to her husband, Michael J. Zimmerman, a stock trader at SAC Capital Advisors, a hedge fund with offices in Connecticut and New York, according to people involved in the inquiry. Investigators are trying to determine whether he knew about research reports by Lehman analysts before they were released to clients and whether he profited by trading in those securities.
That inquiry into SAC ended, but nevertheless piqued interest in the firm (the kind of interest a firm doesn’t want).
It’s with that in mind that we get the government indictment, which has a less than charitable understanding of the instant messages sent between traders and Steve Cohen.
Dealbreaker’s Matt Levine sums up the complaint: “Despite the euphemism training, people kept emailing Cohen saying ‘here’s a trade based on inside information’ and he kept replying, in essence, ‘cool.'”
This case is the Holy Grail for regulators. It has been for a long time.
Institutional investors have already fled Cohen’s warm embrace. As the case progresses, more investors could do the same.
And while Bharara has said he’s not trying to push SAC out of business, after billions in fines, it could very well happen.
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