From Bernie Madoff to Steven Cohen, Enabling Suspiciously High Returns
Jesse Eisinger, 12 December 2012
To have one employee tied to insider trading may be regarded as a misfortune. But, with apologies to Oscar Wilde, to have six looks like carelessness.
Poor Steven A. Cohen, the powerful hedge fund manager who heads SAC Capital Advisers. People he employs just keep getting swept up in the sprawling insider trading investigation that has spanned years now. In addition to the six who have gotten in trouble for activities when employed at SAC, at least six others have been ensnared by insider trading investigations after leaving the firm. The latest arrest, of the pharmaceutical industry analyst Mathew Martoma, is the first that ties Mr. Cohen to trades the government says were illegal.
An investment manager has defended Mr. Cohen as the “Michael Jordan” of the investing world. But what if he is the Lance Armstrong?
While Mr. Cohen has not been accused of any wrongdoing, you have to wonder whether his returns have been generated not only through his trading brilliance but also through a culture of cutting corners and pushing employees to the point where they break the law. In the United States, you are innocent until proven guilty, and nowhere can that be seen more than for a man who can generate amazing investment returns.
