FBI Agent Who Led Insider Probe to Head N.Y
Diego Rodriguez, the FBI supervisor who oversaw insider-trading probes that led to dozens of convictions, was named to head the bureau’s New York office.Cohen Seeks Law Experts For Fund
Matthew Goldstein
The New York Times
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Steven A. Cohen beat them, and now he wants them to join him.
The billionaire investor, who managed to fend off a criminal insider trading investigation of himself, if not of his former hedge fund, is looking for a former prosecutor and several agents from the Federal Bureau of Investigation to join his new $10 billion investment firm, Point72 Asset Management, said several people briefed on the matter, who spoke on the condition of anonymity.
The billionaire investor, who managed to fend off a criminal insider trading investigation of himself, if not of his former hedge fund, is looking for a former prosecutor and several agents from the Federal Bureau of Investigation to join his new $10 billion investment firm, Point72 Asset Management, said several people briefed on the matter, who spoke on the condition of anonymity.
http://www.bloomberg.com/news/2014-12-16/fbi-agent-who-led-insider-probe-to-head-n-y-offi.html
Cohen Seeks Law Experts For Fund
Matthew Goldstein
The New York Times
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Steven A. Cohen beat them, and now he wants them to join him.
The billionaire investor, who managed to fend off a criminal insider trading investigation of himself, if not of his former hedge fund, is looking for a former prosecutor and several agents from the Federal Bureau of Investigation to join his new $10 billion investment firm, Point72 Asset Management, said several people briefed on the matter, who spoke on the condition of anonymity.
The billionaire investor, who managed to fend off a criminal insider trading investigation of himself, if not of his former hedge fund, is looking for a former prosecutor and several agents from the Federal Bureau of Investigation to join his new $10 billion investment firm, Point72 Asset Management, said several people briefed on the matter, who spoke on the condition of anonymity.
Ronda Churchill | Bloomberg | Getty Images
Steven Cohen
The prospective law enforcement hirings appear to be
another chapter in Mr. Cohen's continuing effort to prove to federal
authorities that his new firm will not tolerate the kind of aggressive
behavior that led to eight people who once worked for his former hedge
fund, SAC Capital Advisors, to either plead guilty or be convicted of
insider trading. SAC itself also pleaded guilty to securities fraud,
paid $1.8 billion in fines to the federal government and agreed to stop
managing money for outside investors — which is why Point72 is a family
office that manages just his personal fortune.
Mr. Cohen's new firm has taken a number of steps to polish its image since SAC entered its guilty plea a year ago. Point72 is in the process of putting together an outside board of advisers to review its management practices. It has also signed a deal with Palantir Technologies, a software company that receives backing from the Central Intelligence Agency, to monitor trading. The firm has said it is now paying bonuses to employees who report unethical behavior.
Read More SEC's White: Insider trading ruling 'a concern'
In April, the firm announced the hiring of a former federal prosecutor, Vincent Tortorella, to serve as its chief compliance and surveillance officer. Mr. Tortorella is overseeing the search to bring several F.B.I. agents into the firm. The executive search firm Spencer Stuart is running the search for a new general counsel, the people briefed on the matter said.
Mr. Cohen's effort to recast his image is seen by some securities law experts as part of a plan to pave the way for his eventual return to managing money for others — something his former hedge fund did for a little over two decades and in the process generated some of the highest annual returns in the hedge fund industry.
"It could be window dressing, but it's possible this experience has really shaken him," said Erik Gordon, a professor of business at the University of Michigan Ross School of Business. "He would much rather still be in the game and managing other people's money."
Read MoreMysterious 'glitch' trade foretold Apple's fall
Mark Herr, a spokesman for Mr. Cohen, said the 58-year-old investor had no desire to manage outside money again.
The firm's makeover comes after an appellate court ruling that dealt a major blow to the campaign against insider trading being waged by the United States attorney in Manhattan, Preet Bharara. The ruling, which overturned the convictions of two hedge fund managers, could make it more difficult for prosecutors to pursue insider trading cases against traders who are far removed from the source of a potentially illegal stock tip.
Last week's ruling, by the United States Court of Appeals for the Second Circuit, is said to have heartened Mr. Cohen, according to another person briefed on the matter.
Against that backdrop, his recent recruitment effort is causing a stir in law enforcement circles, given the prominent role that Mr. Cohen and his former $14 billion hedge fund have played in the government's insider trading investigation, the people briefed on the matter said.
Read More New insider trading rules make it 'easier to cheat'
So far, none of the F.B.I. agents or former prosecutors approached about taking a job at Point72 have expressed any serious interest despite the promise of hefty salaries, the people briefed on the matter said. One person briefed on the matter said F.B.I. agents have "rebuffed" the overtures.
In an interview, Mr. Tortorella confirmed that Point72 was looking to bring in people with law enforcement backgrounds to bolster both its internal compliance effort and the recruitment of new employees. He recently hired a person from the C.I.A. and another from the New York City Police Department to help with the effort.
"We had the corporate equivalent of a heart attack, and we need to make sure that never happens again," said Mr. Tortorella, who noted that the firm's compliance and surveillance team had grown by 20 percent this year, to 35 employees. "There's a determination from the top down that history does not repeat itself here."
Mr. Cohen's new firm has taken a number of steps to polish its image since SAC entered its guilty plea a year ago. Point72 is in the process of putting together an outside board of advisers to review its management practices. It has also signed a deal with Palantir Technologies, a software company that receives backing from the Central Intelligence Agency, to monitor trading. The firm has said it is now paying bonuses to employees who report unethical behavior.
Read More SEC's White: Insider trading ruling 'a concern'
In April, the firm announced the hiring of a former federal prosecutor, Vincent Tortorella, to serve as its chief compliance and surveillance officer. Mr. Tortorella is overseeing the search to bring several F.B.I. agents into the firm. The executive search firm Spencer Stuart is running the search for a new general counsel, the people briefed on the matter said.
Mr. Cohen's effort to recast his image is seen by some securities law experts as part of a plan to pave the way for his eventual return to managing money for others — something his former hedge fund did for a little over two decades and in the process generated some of the highest annual returns in the hedge fund industry.
"It could be window dressing, but it's possible this experience has really shaken him," said Erik Gordon, a professor of business at the University of Michigan Ross School of Business. "He would much rather still be in the game and managing other people's money."
Read MoreMysterious 'glitch' trade foretold Apple's fall
Mark Herr, a spokesman for Mr. Cohen, said the 58-year-old investor had no desire to manage outside money again.
The firm's makeover comes after an appellate court ruling that dealt a major blow to the campaign against insider trading being waged by the United States attorney in Manhattan, Preet Bharara. The ruling, which overturned the convictions of two hedge fund managers, could make it more difficult for prosecutors to pursue insider trading cases against traders who are far removed from the source of a potentially illegal stock tip.
Last week's ruling, by the United States Court of Appeals for the Second Circuit, is said to have heartened Mr. Cohen, according to another person briefed on the matter.
Against that backdrop, his recent recruitment effort is causing a stir in law enforcement circles, given the prominent role that Mr. Cohen and his former $14 billion hedge fund have played in the government's insider trading investigation, the people briefed on the matter said.
Read More New insider trading rules make it 'easier to cheat'
So far, none of the F.B.I. agents or former prosecutors approached about taking a job at Point72 have expressed any serious interest despite the promise of hefty salaries, the people briefed on the matter said. One person briefed on the matter said F.B.I. agents have "rebuffed" the overtures.
In an interview, Mr. Tortorella confirmed that Point72 was looking to bring in people with law enforcement backgrounds to bolster both its internal compliance effort and the recruitment of new employees. He recently hired a person from the C.I.A. and another from the New York City Police Department to help with the effort.
"We had the corporate equivalent of a heart attack, and we need to make sure that never happens again," said Mr. Tortorella, who noted that the firm's compliance and surveillance team had grown by 20 percent this year, to 35 employees. "There's a determination from the top down that history does not repeat itself here."
Other big money managers have looked to law enforcement
for either a top legal or compliance job. Ray Dalio's hedge fund,
Bridgewater Associates, with about $120 billion under management, hired
James B. Comey, a former United States attorney for Manhattan, as its
general counsel in 2010. Mr. Comey left Bridgewater in 2013, when
President Obama tapped him to head the F.B.I. Mr. Dalio's firm also
recruited Arthur M. Cummings, a former executive assistant director of
the F.B.I., to serve as its chief security officer. Mr. Cummings has
since moved to a similar job at General Electric.
Mr. Cohen still has to deal with a pending civil administrative claim of failure to supervise that was lodged against him by the Securities and Exchange Commission. The S.E.C.'s administrative action poses a threat to any plan he might have to eventually manage money of outside investors again, as he could be barred from ever returning to the securities industry.
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But the decision last week that overturned the insider trading convictions of the former hedge fund managers Anthony Chiasson and Todd Newman may have strengthened Mr. Cohen's legal hand. Legal experts say the decision casts doubt on the insider trading conviction of the SAC portfolio manager Michael Steinberg, a longtime confidant of Mr. Cohen's, who was convicted of trading on the same stock tips as Mr. Chiasson and Mr. Newman. The court's ruling also may give Mr. Steinberg's former analyst at SAC, Jon Horvath, grounds to withdraw his guilty plea.
If both Mr. Steinberg's conviction and Mr. Horvath's guilty plea are dismissed, it would weaken the S.E.C.'s claim, which is based in part on the criminal charges against both men.
"As a practical matter a lot of wind has come out of the S.E.C.'s failure-to-supervise action," Mr. Gordon, the Michigan business professor, said.
As of early October, Mr. Cohen's new firm, which has about 870 employees, was said by people briefed on the matter to have generated a year-to-date gross profit of $1.8 billion.
Mr. Cohen still has to deal with a pending civil administrative claim of failure to supervise that was lodged against him by the Securities and Exchange Commission. The S.E.C.'s administrative action poses a threat to any plan he might have to eventually manage money of outside investors again, as he could be barred from ever returning to the securities industry.
More from New York Times:
Economic recovery spreads to the middle class
Ruble continues its decline in Russia
Classic hip-hop is spreading on the radio dial
But the decision last week that overturned the insider trading convictions of the former hedge fund managers Anthony Chiasson and Todd Newman may have strengthened Mr. Cohen's legal hand. Legal experts say the decision casts doubt on the insider trading conviction of the SAC portfolio manager Michael Steinberg, a longtime confidant of Mr. Cohen's, who was convicted of trading on the same stock tips as Mr. Chiasson and Mr. Newman. The court's ruling also may give Mr. Steinberg's former analyst at SAC, Jon Horvath, grounds to withdraw his guilty plea.
If both Mr. Steinberg's conviction and Mr. Horvath's guilty plea are dismissed, it would weaken the S.E.C.'s claim, which is based in part on the criminal charges against both men.
"As a practical matter a lot of wind has come out of the S.E.C.'s failure-to-supervise action," Mr. Gordon, the Michigan business professor, said.
As of early October, Mr. Cohen's new firm, which has about 870 employees, was said by people briefed on the matter to have generated a year-to-date gross profit of $1.8 billion.
MORE FROM CNBC
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Hedge Fund Honchos Are Abandoning Obama And Throwing Their Full Support (And Coin) Behind The GOP
- Apr. 26, 2011, 4:00 AM
- 3,837
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Barack Obama reaped millions in donations from prominent hedge fund managers in 2008.
Steve Cohen; Dan Loeb; Cliff Asness -- they loved him.
But the 2010 election cycle shows a massive swing to the right for the hedge fund crew.
The WSJ reports there has been a clear,
[S]hift in political allegiance within the world of hedge funds... Managers and employees of hedge funds directed a majority of their contributions to the GOP in the 2009-2010 election season, a pattern not seen since 1996, when the industry was much smaller.Democrats received the biggest share of donations from hedge-fund managers for most of the past two decades.Between 1990 and the 2008 election, hedge fund managers and their staff donated roughly $40 million to election candidates, with about 66% of that dispatched to the Dems. But in the 2010 election cycle, out of $11 million in total contributions, 53% of donations by hedge funders went to Republicans.
The reasons for the change? Obama's populist attacks on Wall Street, including singling out of hedge funds for their role in the financial crisis; Democrat attempts to bump up tax bills; concern about the surge in government spending and rising deficits.
And two examples of the new Republican supporters? Third Point and SAC chieftans, Loeb and Cohen.
A Shift at SAC, Third Point
Both Loeb and Cohen were long-time and loyal supporters of the Democrats. But since Obama took office, their fiscal support for the party has plunged.
Loeb, a registered Democrat, "was one of the biggest Obama fund-raisers in 2008, rounding up $200,000 for him [and] in the decade prior, Mr. Loeb and his wife donated $250,000 to Democrats and less than $10,000 to Republicans," the WSJ said.
But since then, Loeb has offered $468,000 to the GOP. He gave the Dems a paltry $8,000 in comparison.
As for Cohen he has "previously been a big Democratic supporter, regularly giving the maximum allowable to Democratic legislators in his home state of Connecticut," and spent $500,000 on Democrats in 2008.
But last year Cohen decided to "direct contributions to GOP campaign coffers and to pro-Republican groups that could raise and spend unlimited amounts." He gave Republican Governors Association alone $1.5 million.
And Cohen was doing more than just giving cash; he also gave time. Remember that GOP mid-term strategy meeting he hosted last year?
Other Swingers
Cliff Assness of AQR. Historically he's been a Republican man, but his staff haven't been -- they've always favored the Dems. But last year, Assness own donations surged and his workers "all but stopped their donating to Democrats," the WSJ said. The result -- $550,000 for Republicans, and $3,000 for Dems.
Bruce Kovner of Caxton Associates. He wasn't a massive donor before he attended that meeting at Cohen's home. He donated $4,600 to GOP hopefuls in '08, then in 2010, he gave $615,000 to the GOP.
John Paulson of Paulson &Co. He and his troops "had given about equally to the two parties in 2008. But in 2010, he and his employees gave three times as much to the GOP as to Democrats."
Ken Griffin of Citadel. He'd given equally to each side in '08. In 2010, $1.8 million went to Republicans from the Griffins. The Dems got $2,400.
Of course, not everyone has jumped ship. Marc Lasry of Avenue Capital is still with Bam: "I'm still a huge supporter" he told the WSJ, and he plans to fundraise for him again.
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