Steve Cohen’s frustrated PR machine; unlikely lobbyists; and the $600 million train station
Steven Cohen, the billionaire who is widely reported to be the ultimate target of prosecutors investigating insider trading at his hedge fund, has to be either crazy-reckless or supremely confident of his innocence. Either way, the master-of-the-universe buying spree he went on last week must make him the ultimate nightmare for the savvy financial PR firm that represents him, Sard Verbinnen &Co.
On the heels of a proposed $616 million insider trading civil settlement with the SEC – which a federal judge last week said he was skeptical about approving because Cohen’s firm admitted no wrong-doing, and which prosecutors have taken pains to point out does not end their criminal investigation – Cohen made headlines last Monday by buying a Picasso for $155 million. The next day he got still more ink, this time for snagging a place in the Hamptons for $60 million down the road from an estate he already owns there.
That’s hardly the kind of keep-your-head-down behavior one might expect from someone trying to hold prosecutors at bay and soften public calls for his beheading. When a longtime top deputy was marched out of his Park Avenue coop early Friday morning after being arrested by the FBI, the bulls-eye on Cohen became that much more obvious and made his over-the-top buying spree that much more bizarre.
So, while the straight news stories about these purchases or about the ongoing investigation are fine, I’d like to read something about whether this guy is crazy, and about what his PR people at Sard Verbinnen – who’ve represented such villains-of-the-moment as Martha Stewart and former Lehman Brothers CEO Richard Fuld – have been telling him about this kamikaze behavior.
Could Cohen be so deluded that he thought that the purchases – which were destined to become highly publicized because of their size and which Cohen’s PR people made no effort to hide – would provide “What-me-worry?” reassurance to his investors or be an intimidating display of strength to the prosecutors? I’d pay a lot for the video rights to whatever discussions Cohen had about all of this with the Sard Verbinnen team, but I’ll settle for a print story with some leaks of the conversations.
Sard Verbinnen founder and CEO George Sard is usually the member of the firm most identified publicly with high profile clients; he memorably was photographed sitting just behind Fuld when the fallen Lehman CEO was dragged before a Congressional investigating committee. Yet only Jonathan Gasthalter, who works for Sard, has been named as speaking on behalf of Cohen. What’s the story behind that?
2. Unlikely lobbyists:
Question: Why would the Corrections Corporation of America, a for-profit business that provides outsourced jail and prison facilities to cities and states hoping to save money on incarceration, be lobbying against immigration reform?
As explained in this item from the Center for Responsive Politics (the terrific organization that monitors political spending in Washington), the company makes significant money jailing detained illegal immigrants, and immigration reform might result in reduced detentions.
This suggests an ongoing series for the Washington Post or Politico that covers Capitol Hill and, better yet, any newspaper covering a state capital: Spotlight the most unlikely special interest lobbying for or against something.
Sure, it’s easy to figure out that the soda industry will be wary of regulations aimed at curbing obesity. Or that the oil and gas people will line up against rail subsidies. But how about some special interest positions that are more interesting?
Are makers of CT scan and MRI equipment trying to block medical malpractice tort reform because it might reduce the number of unnecessary tests that doctors order in the emergency room just to protect themselves, thereby creating an unlikely alliance between big corporations like GE and Siemens and their traditional foes in the plaintiffs lawyers’ bar?
Or are police unions fighting laws allowing cameras to catch speeders because from their perspective anything that replaces a cop can’t be good? Yes, at least in Albany; this story reports that the police unions’ successful opposition drove New York City Mayor Michael Bloomberg into a tirade last week against legislators who, in his view, caved to special interests.
A series like this would be a fun way to shine light on how, depending on your point of view, special interests selfishly block progress for the narrowest of reasons — or are there to make sure every side is heard.
3. A $600 million question:
Sorry to repeat a trick, but here’s another quiz: Which part of this routine report from the New York Post is loaded with story potential?
The old South Ferry subway station will reopen for business in the first week of April, Gov. Cuomo announced today.
The 100-year-old loop station has been closed since 2009, when the MTA opened a $545 million replacement stop directly above it.
The MTA will use the old station while doing repairs on the new one, which was severely damaged in Hurricane Sandy.
The cost to fix the brand new station — which was heavily flooded — could be as high as $600 million.
It will take two years to complete the repairs, officials said.
Answer: “$600 million” to repair a train station? How can that be?
Other than this story on a terrific website I found called “Second Avenue Sagas” that covers the New York City subway system, the reports I’ve seen on local New York television stations and in the press parrot the Metropolitan Transportation Authority’s estimated $600 million tab for repairing a train station as a given, the way they might report on the weather. (Well, actually, that’s not true; the weather is often breathlessly hyped.)
A quick Google search puts $600 million in perspective. Airbus, the giant jet manufacturer , is spending that much to build and equip a vast assembly line plant in Alabama to churn out hundreds of jets a year. GM is about to spend $600 million on a new 450,000 square ft. factory in Kansas. The Arizona Cardinals built their new football stadium in Phoenix for $456 million. Add 10% to the $600 million – I’ll bet there’s a cost overrun at the subway station of that much and more – and you could cover the entire budget for the San Francisco school system. All to repair a subway station.
Can’t someone do a dollar by dollar breakdown of that $600 million and follow all the money? Let’s see which contractors are making what kinds of profits. Which architects or designers are getting rich off of the Hurricane Sandy repair? What are the suppliers’ profit margins? Are union rules forcing wasteful staffing?
Why does the press take these expenses as a necessary fact of life? Following the money is always a good story.
PHOTO: Hedge fund manager Steven A. Cohen, founder and chairman of SAC Capital Advisors, responds to a question during a one-on-one interview session at the SkyBridge Alternatives (SALT) Conference in Las Vegas, Nevada May 11, 2011. Reuters/Steve Marcus