The ex-wife of Steven A. Cohen, legendary multi-billionaire manager of hedge-fund SAC, whom the ever controversial (and confrontational) Patrick Byrne has for some time been suggesting is the, or perhaps, one of the Sith Lord/s of Wall Street, is using RICO laws to get a bigger settlement from her former husband. That´s turned up some interesting accusations:
“In Ms. Cohen’s version of events, her husband and his brother, Donald Cohen, orchestrated a long-running racketeering scheme. She says her former husband lied under oath about his net worth, conducted mail and wire fraud, and concealed from her and the Supreme Court of New York millions of dollars that he possessed in 1990, thus reducing her divorce settlement.
Even in this post-Madoff era, the accusations might seem outlandish. Mr. Cohen, known as Stevie, is one of the nation’s most successful money managers. With a $13 billion hedge fund and a sumptuous Connecticut estate, he is, at 53, a Wall Street legend.
But all of this comes at an uncomfortable moment for Mr. Cohen and his company, SAC Capital Advisors. Since federal prospectors began making arrests in a major insider trading investigation in October, SAC, which is based in Stamford, Conn., has been linked to the case.
A former SAC analyst has pleaded guilty on charges related to insider trading that occurred years after he left the firm and has agreed to provide any information he might have about insider trading that occurred when he was at SAC. No current SAC employee or manager has been charged with wrongdoing.”
and this:
“She claims in her suit that in 1985, while they were married, Mr. Cohen confessed to her that he received inside information about the takeover of RCA by General Electric, a megadeal of the 1980s that prompted a sweeping insider-trading investigation. The Securities and Exchange Commission dropped its investigation after bringing charges against a G.E. executive and a Houston family with ties to a Wall Street bank.”
and this:
“When the couple divorced, Mr. Cohen stated that, on paper, he had a net worth of $16.9 million. But $8.7 million of that was “worthless,” he said, because of a bad real estate deal with Mr. Lurie.”
Lurie, who later fell out with Cohen, claimed that the money he got from Cohen to put through the deal came from an SAC trading account.…
My Comment
And some substantiation for the charges can be found in this WSJ story on Goldman Sachs analysts tipping off their own traders first and then favored hedge-funds (SAC at the head of them), before their own clients(which I noted in 2006).
See also this Deep Capture post.
Apparently, it´s not easy street being a Sith Lord. You never know when your spurned Sith Lady (not to mention various disgruntled Sith Knaves) might spring out from the shadows to expose what´s apparently standard operating procedure in the money business.
(Sigh) Not even a Greenwich mansion seems worth it (for a colorful account of the culture of the hedgies, whom we call the bubble kings, see “The High Way Robbers,” in ¨Mobs, Messiahs and Markets,”(Bonner & Rajiva, Wiley 2007).
I said this a long time ago in “Three Card Capitalists”
The market collapse might have been triggered proximately by failed sub-prime loans, but the deeper sources of it lie in the massive fraud and corruption that go back to the 1980s, and even earlier, to the 1970s.