Steven Schonfeld’s conspicuous consumption

By Felix Salmon
August 11, 2009
Aaron Lucchetti has a 2,000-word front-page WSJ story today which appears online under a "management" heading and with the headline "Wall Street's B-List Firms Trade on Bigger Rivals' Woes". Really, however, it's all about the obscene displays of wealth being perpetrated by Steven Schonfeld, the new poster boy for conspicuous consumption.

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Aaron Lucchetti has a 2,000-word front-page WSJ story today which appears online under a “management” heading and with the headline “Wall Street’s B-List Firms Trade on Bigger Rivals’ Woes”. Really, however, it’s all about the obscene displays of wealth being perpetrated by Steven Schonfeld, the new poster boy for conspicuous consumption.

Schonfeld’s new $90 million house, on Whitney Lane in Old Westbury, Long Island, not only has “a poolside cabana designed to look like the Cove Atlantis resort in the Bahamas” but also sports a 9-hole golf course which is off-limits to anybody if Schonfeld isn’t at home:

“It’s not a private golf course,” he explains. “It’s a personal golf course.”

And then there’s this:

At one dinner with traders, he said that anyone who looked at the menu for more than 90 seconds was in the wrong business…

At high-end restaurants, Mr. Schonfeld has been known to order one of everything on the menu, with his party leaving much of the food uneaten.

Schonfeld got into a spot of bother (including $1.1 million in fines from the NYSE) when he tried to be a broker, so now he’s basically just a trader, hiring laid-off employees from big Wall Street firms and seeding them with his own money. Or, as Forbes put it in 2005,

Schonfeld oversees a harem of semi-independent traders who use his equipment, his software and his capital, sharing profits with him and paying him trading commissions.

It’s possible that he’s exaggerating the amount of money he’s spent on his house, and is giving obnoxious interviews to the WSJ, in order to stand out from a crowded field of small trading shops. Or else he’s maybe just a leveraged day-trader who made lots of money from the volatility of 2008 and now wants to flash his cash. Either way, I suspect that Schonfeld is going to be spending much more time on his private personal golf course than at the Old Westbury Country Club down the street. This kind of attitude tends not to sit well with one’s upscale neighbors.


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It would certainly make for one hell of a property tax bill…that’s just shameful to have a “personal golf course” and only be a 9-handicap…

Posted by Griff | Report as abusive

check this out

Posted by Segio | Report as abusive

Felix, this guy is a crook. He originally gamed the system successfully as a SOES bandit, and in 2008 got away with murder via concerted (ie manipulated in concert with other traders) and utterly illegal naked shorting. The fact that the SEC refuses to fully prosecute guys like this is an insult and highlights one of the many outrageous and unfair practices that will define this era. That is the REAL story – start digging and make a name for yourself.

Posted by mike | Report as abusive

Go to Google maps, and punch in these coordinates 40.805364,-73.595827 ..that’s the house under construction.

Posted by Alex | Report as abusive

From n-60000-deaths-and-the-story-of-dendreon -chapter-14-of-15/ regarding the naked short sellers’ conspiracy to kill Dendreon (DNDN):

“As you will recall, Leon Black funded the new Milken “philanthropic” foundation that hired National Cancer Institute prostate cancer chief Alison Martin after she helped the chairman of Milken’s Therapeutic Consortium foil Dendreon’s FDA application. Leon Black is also a business partner of Felix Sater, the alleged Russian mobster who once stuck a broken stem of a wine glass through a stock broker’s face and then went on to run White Rock Partners, a Mafia-infested brokerage that was indicted for manipulating stock in cahoots with the above-mentioned Lindsay Rosenwald’s D.H. Blair.

Prior to starting his own hedge funds, Balyasny was the top trader at an outfit called Schonfeld Securities, the proprietor of which is a man named Steven Schonfeld. Prior to founding his firm, Schonfeld worked for Blinder Robinson (then known on the Street as “Blind’em and Rob’em”). Blinder Robinson was among the first firms to be shut down by the Feds when they began investigating a network of Mafia-linked brokerages that included Rosenwald’s D.H. Blair and Sater’s White Rock Capital.

Schonfeld worked at Blinder Robinson with Anthony Elgindy, the criminal naked short seller who was was later sentenced to prison for stock manipulation and bribing FBI officials. As you will recall, Elgindy appeared for his sentencing missing a finger – reportedly because the Russian Mafia forced him to saw it off, giving him something on which to meditate while he served his 11 years in jail. Meanwhile, the Elgindy investigation led the authorities to other hedge funds, such as Gryphon Partners, whose manager was later among the few who bet big against Dendreon.”

ok. certainly, a bit over the top in terms of consumption and some regulatory issues. lets remember that all the major bulge bracket firms have books full of violations and the best of all, goldman implicated in the treasury bond manipulation. It is wall street, it is rampant, but that doesnt justify it. I worked for Schonfeld/Opus for many years good and bad. Through it all there was a consistency of training, software and analytics devlopment and availability of capital. Tens of Millions of dollars have been invested in providing the necessary edge for traders. In some lean times personal checks were written by the man and after I left I was owed a substantial, though non contractual, amount of deferred compensation. Every penny was paid on time.
There is always going to be jealousy, as palpable as greed in trading, and with so many firms NOT managing risk correctly, this man and his firm have been the beneficiaries of doing just that. Lets remember, that this ‘style’ of momentum trading was dormant over the last 5 or 6 years, with meager results. But they continued to invest in their people and their businesses and reaped the rewards of patience and market opportunities. He deserves every dollar, but could be a little more humble, given the times where ‘under high water mark’ hedge funds will not get paid for years to come and often bail on their investors and redemptions.

Posted by bobby | Report as abusive

The WSJ article was factually accurate and does a great job of explaining why smaller, second tier firms are having success in this environment. But I don’t think the article accurately portrayed steven schonfeld, the person. While the facts all appear right the impression it left on readers is unfair. As someone who knows him for 30+ years, the stories don’t quite capture his intent.

Steven built a business from the ground up over the past 20 years with no assistance in terms of personal or family wealth or connections in the marketplace. He has historically poured the profits back into the business to continue to build it out. He has paid out over a billion dollars to traders and thus have helped many others achieve wealth beyond their dreams. But in two instances when the going got tough, steven was even more than generous. He paid out millions of dollars to traders in deferred compensation in years where those same traders were losing millions of the firm’s capital. More recently, investors in a fund of funds received “stop loss” payments in excess of $10 million dollars as steven was so disappointed with the 2008 fund performance.

Steven is generous with his friends as many can attest to his personal and thoughtful gifts, support for their charitable causes and yes even a little over the top dinner and other celebrations. But he does this so everyone can enjoy the food as much as he does.

During these times, did the article make him appear out of step, maybe so. But the house has been a 10 year project of love. Accumulating the pieces of property, designing the house, the golf course and furnishing it with an eye to leave something that can stand the test of time. I don’t think he needs to apologize or feel badly about what he has accomplished.

posted by bobby

Posted by andrew | Report as abusive

I dont know Mr. Schoenfeld, but I intuitively am in synch with what poster “Bobby” Has stated. I have never wanted to work for/with anyone in my 20 years on Wall Street due to philosophical differences. I am a resonable judge of character, and I seldom largely agree with anyone, but I absolutly love what this man has accomplished, and the sense of style that he utilized in getting there. If you are affiliated with this man, consider yourself lucky for there are more characters of low moral stature in our business than I care to admit.

Posted by TP7997 | Report as abusive

I have worked for Schonfeld on and off since 1993. He has always been caring and helpful in everyway. I had my good years and bad years and most employer’s on your bad years walk away from you, Steven if anything was very generous and encouraging in tough times. He gave me chance after chance to make a good living. I was let go for over a year ago for not being able to make a living and still can’t think of a bad thing to say about the man. He is a great business man that built an empire from scratch. Reading some of these negative articles looks like jealous people. Yes he is extravagant with his spending, it is his right to spend the money he has earned in any way he likes. I’m jealous I wasnt able to become a millionaire doing something I loved like trading, but atleast he gave me every chance to make it.

Posted by robertz1111 | Report as abusive