From: Truth Out
High-profile prosecutions only hint at the crime and ethical misbehavior rampant in America’s most rewarding high-finance suites.
|Steven Cohen, the once-secretive billionaire hedge fund manager, is suddenly stepping in to the spotlight more. (Image: Minh Uong / The New York Times)|
They’re hunkering down at SAC Capital, the hedge fund empire billionaire Steven Cohen has spent over two decades building. Federal prosecutors have been picking off SAC’s current and former second bananas one by one, plea bargaining for information that brings them ever closer to Cohen.
This past March SAC coughed up $616 million, without admitting guilt, to settle a federal civil suit charging the hedge fund with insider trading. A defiant Cohen then went out and plopped down $155 million for a Picasso and $60 million more for a new Hamptons manse, just to show how little he’d miss the $616 million.
Now the feds are chasing Cohen on criminal charges, and SAC has announced the hedge fund will no longer cooperate — on an “unconditional” basis — with government requests for information.
The information already out in public has considerably dimmed Cohen’s “financial genius” aura. The astounding 30 percent annual returns his SAC has been averaging, a vivid Vanity Fair chronicle details this month, rest on a gusher of insider tips that SAC spends hundreds of millions to keep flowing.
Whether prosecutors can prove all this, in a court of law, remains to be seen. But the hedge fund industry’s recurring response to scandal — “every industry has a few rotten apples” — is wearing thin. The hedge fund universe, one Harvard Business Reviewcommentary observes, has become a “crimogenic” environment that encourages those enmeshed in it “to ignore legal and ethical rules.” MORE