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Ivy Schmerken
Ivy Schmerken
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Steven Cohen Raises Social Profile

SAC Global's founder attends social events to blunt allegations of insider trading.

Steven Cohen, the founder of hedge fund SAC Capital Advisors, has been busying attending social events to raise his public profile. The once reclusive hedge fund billionaire is reportedly one of the serious bidders to buy a stake in the financially strapped New York Mets.

But Cohen is also a target of investigators looking into insider trading. The New York Times reported on Saturday that federal prosecutors are examining trades in a hedge fund run by SAC Capital Advisors, his $12 billion hedge fund in Stamford, Conn.

Though Cohen’s operation has been shrouded in secrecy for years, the billionaire has been making public appearances of late at social events and granting interviews at a hedge fund conference. Bloggers suggest Cohen has retained a public relations firm telling him to raise his public profile, as if image building and philanthropy could counteract any allegations of improper trading.

While Cohen attended a gala event at the Metropolitan Museum of Art last week and also granted an interview with Vanity Fair Magazine recently, he also traveled to a high profile hedge fund conference in Las Vegas and attended the World Economic Forum in Davos, Switzerland.

It’s doubtful that federal prosecutors with the U.S. Attorney in Manhattan will care much about Cohen’s social life or philanthropic activities. There have been persistent whispers for years about SACs “cowboy culture” and outsized returns, which has minted millionaires and made Cohen “a billionaire several times over," reports the New York Times. Those whispers grew louder this year after two of SAC’s portfolio managers pleaded guilty to charges of insider trading. However, these two portfolio managers — Noah Freeman and Donald Longueuil— worked at different offices — Boston and Manhattan— and had little contact with Cohen when they worked for the firm.

But so far, Cohen has proved to be the Teflon hedge fund manager. Neither Cohen nor SAC Global has been accused of any wrongdoing and the firm is cooperating with the investigation. As the New York Times outlines, Cohen runs a decentralized trading operation comprised of 142 small teams which are each given authority over hundreds of millions of dollars to invest. So he appears to give autonomy to each team. Cohen sits in the middle of an expansive trading floor or in a corner office and monitors trading and imposes what he terms “a down and out number” on traders who can be fired for bad performance. He can suddenly appear by video on any trader’s desk to question their positions, notes the New York Times article. Though Cohen “grills” portfolio managers on their investment plans, reportedly the majority of the firm’s daily trades are made without consulting Cohen. In addition, Cohen himself does not trade technology stocks, which are the stocks implicated in the various insider-trading cases.

Meanwhile, the Mets can’t cut a break: They are struggling financially because their owner Fred Wilpon and Saul Katz lost a chunk of money in the Madoff Ponzi scheme and are being sued by the Madoff Trustee Irving Picard to recover $1 billion for Madoff victims. So the Wilpons are selling a minority (or majority) stake in the team to raise funds. But the question is will baseball commissioner Bud Selig allow the Mets to become entangled with Cohen while he is under regulatory scrutiny?

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
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