Stevie Cohen’s criminal enterprise
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Steve Cohenâ€™s SAC Capital Advisors has officially pled guilty to insider trading charges. SAC will pay $1.8 billion in a mixture of civil and criminal fines and forfeitures, and will stop accepting outside money from investors. The firm even revised its public statement at the last minute to express adequate contrition.
As Bloomberg notes, the SAC inquiry was just one part of an unprecedented multi-year government crackdown on insider trading: at least 87 people have been charged and 75 convicted since 2009. Six former SAC traders have already pled guilty to insider trading charges, with two more facing trial soon. Yet Cohen, aka the Fedâ€™s White Whale or â€śthe ultimate prizeâ€ť, was not charged by the DOJ. â€śThe legal conclusion,â€ť the WSJ edit board writes, â€śseems to be that Mr. Cohen is a noncriminal running a criminal enterprise.â€ť
For Matt Levine the plea agreement is both a â€ścomplete admission of guilt and still lets you believe whatever you want about the essential truth of what SAC was up to.â€ť Its completely possible, Levine says, to read the plea agreement as evidence that Cohen was guilty of insider trading or that SAC is being punished for the work of a few rogue traders. Still, as DealBook notes, Cohen is still facing civil charges brought by the SEC, while the FBI is looking into SAC trades in shares of Gymboree, with the help of at least one cooperating witness.
John Cassidy writes that itâ€™s unlikely prosecutors will bring racketeering charges against Cohen: â€śFar from being treated like a mobster, Cohen was hit solely in the pocketbook.â€ť (The bulk of the fines will come out of Cohenâ€™s net worth). Sheelah Kolhatkar says that Cohen will â€ścontinue to be a force in the market,â€ť even after his fund converts to a family office. That, Reuters says, could mean Cohen may run a smaller, less regulated, and possibly more leveraged operation. For now at least, Morgan Stanley, Goldman Sachs, and JPMorgan will continue to do business with the firm.
The real legacy of the SAC case, James Stewart writes, is that it may serve as a â€śtextbook exampleâ€ť of when to prosecute a corporation and may be a â€śharbinger of far more aggressive prosecution of corporate crime.â€ť The size and â€śexpressive valueâ€ť of the settlement may also be a powerful statement to the hedge fund industry, he says. As one legal expert told Stewart: â€śYou could argue that the audience for this is very sensitive to dollar signsâ€ť – Ryan McCarthy
On to todayâ€™s links:
Don’t expect the CFTC to have the budget to do its job anytime soon – Pat Garofalo
Living on $8 an hour in NYC – PBS Newshour
Nearly a third of working Americans make less than $15,000. Half make less than $27,000 – Social Security Administration