Issue of the week: Gunning for a hedge fund mogul
The feds are finally closing in on legendary hedge fund boss Steven Cohen.
The feds are finally closing in on legendary hedge fund boss Steven Cohen, said Aaron Smith in CNNMoney.com. For years, the government has been trying to build an insider-trading case against the 56-year-old billionaire, one of Wall Street’s most revered and feared traders. Last week, prosecutors got “a bit closer to their prize.” They charged one of his former portfolio managers, Mathew Martoma, with a $276 million insider-trading scheme, the largest such case ever prosecuted. Martoma is now the seventh current or former employee of Cohen to have been implicated in dirty deals, said Kevin Roose in NYMag.com. While the feds’ earlier attempts to link Cohen to wrongdoing failed, the facts of this latest case suggest that his “plausible deniability window is shrinking.”
Prosecutors clearly hope Martoma will flip on his former boss, said Peter Lattman and Peter J. Henning in The New York Times. The 38-year-old is charged with obtaining secret data from a doctor about a problematic Alzheimer’s drug, and then acting on that information by unloading the drugmakers’ stocks and even betting against them to reap hundreds of millions of dollars. The feds have suggested that Cohen approved of Martoma’s actions and that he traded on the secret information. But the evidence is circumstantial, and it would be “difficult for a jury to infer anything incriminating just from the way these trades were executed.” Prosecutors have so far failed to persuade Martoma to take the stand against Cohen, said Michael Rothfeld and Chad Bray in The Wall Street Journal. But now that the father of three young children faces up to 19 years in prison, reality may be sinking in. Until he was arrested last week, Martoma didn’t know that the doctor in the case had agreed to cooperate against him, and that fact could add pressure on him to strike a deal.
There’s no doubt that “Martoma’s arrest turns up the heat on Cohen,” said Svea Herbst-Bayliss in Reuters.com. Whether he is ultimately charged or not, the legal and financial fallout for Cohen will likely be huge. Because of the way his fund is organized, Cohen himself could be on the hook for paying back illicit profits if the feds prove their case. He’s already working to “calm the nerves of investors who may be unsettled by the latest charges and considering redeeming money.” And he’s well aware that the feds would get real satisfaction from taking down a hedge fund giant, one way or another. If “investigators can’t find enough evidence to charge Cohen with insider trading,” there’s a real chance they’ll settle for lesser charges.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Create an account with the same email registered to your subscription to unlock access.
-
Today's political cartoons - October 13, 2024
Sunday's cartoons - the swing of things, fear of facts, and more
By The Week US Published
-
5 timely cartoons about climate change denial
Cartoons Artists take on textbook trouble, bizarre beliefs, and more
By The Week US Published
-
Kris Kristofferson: the free-spirited country music star who studied at Oxford
In the Spotlight The songwriter, singer and film-star has died aged 88
By The Week UK Published
-
Issue of the week: Yahoo’s ban on working from home
feature There’s a “painful irony” in Yahoo’s decision to make all its employees come to the office to work.
By The Week Staff Last updated
-
Issue of the week: Another big airline merger
feature The merger of American Airlines and US Airways will be the fourth between major U.S. airlines in five years.
By The Week Staff Last updated
-
Issue of the week: Feds’ fraud suit against S&P
feature The Justice Department charged S&P with defrauding investors by issuing mortgage security ratings it knew to be misleading.
By The Week Staff Last updated
-
Issue of the week: Why investors are worried about Apple
feature Some investors worry that the company lacks the “passion and innovation that made it so extraordinary for so long.”
By The Week Staff Last updated
-
Issue of the week: Does Google play fair?
feature The Federal Trade Commission cleared Google of accusations that it skews search results to its favor.
By The Week Staff Last updated
-
Issue of the week: The Fed targets unemployment
feature By making public its desire to lower unemployment, the Fed hopes to inspire investors “to behave in ways that help bring that about.”
By The Week Staff Last updated
-
Issue of the week: Is Apple coming home?
feature Apple's CEO said the company would spend $100 million next year to produce a Mac model in the U.S.
By The Week Staff Last updated
-
Issue of the week: What’s next for Citigroup?
feature CEO Vikram Pandit’s abrupt resignation just as the bank is finally showing signs of recovery shocked Wall Street.
By The Week Staff Last updated