SAC's Cohen shows no signs of retreat despite scandal
Hedge fund industry titan Steven A. Cohen appears to have made up his mind about one thing - he has no plans to do anything but run his $14 billion SAC Capital Advisors even as US authorities are breathing down his neck.
Over the past week, Cohen, long envied on Wall Street for his years of double-digit returns, has absorbed a one-two punch as yet another of his former managers was arrested on insider trading charges and US securities regulators warned they may file civil charges against his 20-year-old hedge fund firm.
For many managers, this kind of news would have been personally devastating and might have prompted a retreat. But if anyone thought the 56-year-old billionaire might use the heightened regulatory scrutiny as reason to retire early and close up shop, they are mistaken.
That is the message Cohen conveyed to investors on a call last Wednesday. Employees of SAC heard from him a day later. These people said it is business as usual at Stamford, Connecticut-based SAC, where employees have grown accustomed to drawing scrutiny from federal authorities for several years now.
To date, federal authorities have charged or implicated seven former employees of SAC Capital with insider trading while working at the firm, but have not alleged any wrongdoing by Cohen himself.
PERSONALLY SIGNED OFF
The criminal and civil charges filed on November 20th against Mathew Martoma come closest to Cohen because authorities allege the SAC Capital owner personally signed off on the trades by Martoma that generated profits and avoided losses totaling $276 million.
But securities lawyers said the government may have a tough time finding evidence that Cohen knew Martoma had relied on illegal information to trade, and that may bolster Cohen's resolve not to make any radical changes at SAC. And his results remain good. His main fund has returned 10 percent this year, while hedge funds on average have risen only 5 percent according to industry tracker HFR.