BROWSE BY TOPIC
Stories of Interest
- Banca IMI Securities to Pay $35Mn for Improper Handling of ADRs in Continuing SEC Crackdown
- Members of White House ‘Arts Panel’ Resign En Masse in Protest of Trump
- FINRA Whiffs on Disciplinary Sanction: Bill Singer's 'Negligent Market Manipulation in OTC Stock Promotion'
- Heather Heyer’s Mother Says, ‘I’m Not Talking to the President’
- Goldman Sachs May Have Lost $100Mn on Energy Bet Gone Wrong
- SEC Drops Case Against Ex-JPMorgan Traders Over 'London Whale'
- Financial Advisers That Invest in Technology Need to Accomplish These Two Things
- FINRA Amends Codes Regarding Expedited Arbitrator List Selection
- FINRA July 2017 Quarterly Disciplinary Review (Podcast)
- Senior Exec in Citigroup's Equities Unit Has Left
- Prudential Plotting its Escape From Fed's Tough Oversight
- Why CEOs Spurned Trump's Business Councils, in Their Own Words
- A Stockbroker, Her LLC, and Her Customers' Loans (Or Investment?) - Bill Singer
- Brian Quintenz Sworn In as CFTC Commissioner
- A Gary Cohn Resignation Would 'Crash the Markets' – Mgmt Guru Jeffrey Sonnenfeld
- Trading Firm DRW to Buy RGM Advisors - As Low Volatility Forces Out Weak HFT Players (subsc reqd)
- Reputational Damage - Rajat Gupta on Hard Road to Recovery
- 7th Circuit Affirms Spoofing Conviction - Bill Singer
- Wells Fargo Announces Board Changes
- Judge Rules Against Ex-Goldman Employee in Fed Leak Case
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
What's Eating Steven Cohen?
[Photo: by Alan Jeffery / CNBC]
by Howard Haykin
So, Steven A. Cohen plans on managing a $20 billion hedge fund - starting in 2018, when he’s no longer sidelined by SEC and CFTC restrictions. Such a figure would eclipse the $16 billion that SAC Capital once managed and would be the biggest hedge fund launch in history.
In 2016, Mr. Cohen settled SEC and CFTC civil charges that he failed to supervise employees involved in insider trading. In those deals, without admitting or denying any wrongdoing, Mr. Cohen agreed not to manage outside money in 2016 and 2017. SAC Capital had earlier pleaded guilty to insider trading, for which it paid $1.8 billion in penalties. Preet Bharara and his team of federal prosecutors were never able to stick Cohen with any criminal charges.
Mr. Cohen currently runs Point72 Asset Management, his family office that employs 1,000 employees and operates out of Stamford, CT.
COHEN’S ‘FLIP OF THE BIRD’ COMEBACK IN 2018. The NYPost refers to Mr. Cohen’s proposed comeback as a “$20B Flip-of-the-Bird to the SEC” – a derogatory expression that connotes “the act of extending the central digit of the hand with the intent to cause offense.”
If that's accurate, one world can best explain his motives - HUBRIS! Defined as excessive pride or self-confidence, in Greek tragedy, the term "hubris" describes excessive pride toward or in defiance of the gods, which in turns brings about the downfall, or ‘nemesis’, of the perpetrator of hubris.
Hubris is on display repeatedly among the uber-wealthy financial types – particularly by private equity investors, who can annually earn upwards of hundreds of millions – even billions – of dollars. Hubris is also exhibited during seemingly senseless corporate take-overs. Let's use Bank of America as an example.
After the millenium, BofA Chief Executive Ken Lewis was so hell-bent on building the world’s largest bank that he pursued nonsensical and costly takeovers – like the $4 billion acquisition of Countrywide Financial. That one investment cost, alone, cost the bank tens of billions in settlements and legal fees. [And, for the record, HUBRIS is also a powerful driver among power-hungry types, like our current President.]
Yet, to accomplish his monumental fund-raising goal – notwithstanding his starting base of $11 billion (Cohen's personal fortune under management at Point72) - Mr. Cohen will likely need to rely on something other than his recent investment returns. While he averaged 29% annual returns at SAC Capital, Point72 returned just 1% for 2016 (as compared to over 9% for the S&P 500 Index) – his 2nd worst annual performance ever.
Among other things, some say Mr. Cohen would have to lower his once legendary high fees. And his new fund might come with a so-called pass-through arrangement - a relatively uncommon structure under which recurring expenses are paid directly by investors instead of the fund firm.
Regardless of his motives and methodologies, Steven Cohen will undoubtedly succeed. That’s because he has much to prove – both to the regulators, and, after his ‘announcement’, to the rest of the world.