Cohen

Steve Cohen's SAC May Face Criminal Charges

The longest ongoing government "sting" operation against a hedge fund, possibly in all of history, that which absolutely everyone has known about for years now i.e., against Steve Cohen's SAC and its Bernie Madoff-esque series of profitable years (at least until recently that is, when "expert networks" no longer accept any calls originating out of Connecticut or New York), may be coming to an end, following what the WSJ reports may be an imminent filing of criminal charges against the hedge fund. "U.S. prosecutors are considering possible criminal charges against SAC Capital Advisors LP as a result of the government's insider-trading investigation of the hedge-fund firm, according to people familiar with the matter.  It isn't clear what led prosecutors to warn the Stamford, Conn., hedge-fund operator that it could be charged criminally. But the move is the strongest sign yet that prosecutors and the Federal Bureau of Investigation are trying to ratchet up the pressure as a five-year deadline looms to file the most serious charges related to trading that allegedly involved Mr. Cohen."

Lack Of Overnight Euphoria Follows Japan Yen Jawboning In Light Trading Session

A quiet day unfolding with just Chicago Fed permadove on the wires today at 1pm, following some early pre-Japan market fireworks in the USDJPY and the silver complex, where a cascade of USDJPY margin calls, sent silver to its lowest in years as someone got carted out feet first following a forced liquidation. This however did not stop the Friday ramp higher in the USDJPY from sending the Nikkei225, in a delayed response, to a level surpassing the Dow Jones Industrial Average for the first time in years. Quiet, however, may be just how the traders at 72 Cummings Point Road like it just in case they can hear the paddy wagons approach, following news that things between the government and SAC Capital are turning from bad to worse and that Stevie Cohen, responsible for up to 10-15% of daily NYSE volume, may be testifying before a grand jury soon. The news itself sent S&P futures briefly lower when it hit last night, showing just how influential the CT hedge fund is for overall market liquidity in a world in which the bulk of market "volume" is algos collecting liquidity rebates and churning liquid stocks back and forth to one another.

From Petrodollar To Petrogold: The US Is Now Trying To Cut Off Iran's Access To Gold

The US is moving to broaden its 'blockade' efforts of Iran to the movement of pure gold into the Islamic Republic. The US-led embargo of Iranian crude succeeded in slowing the flow of petrodollars into the nation but as Foreign Affairs committee chairman Edward Cohen remarked, there is "no question that there is gold going from Turkey to Iran." While the official line from US elite such as Bernanke remains that 'gold is not money' it appears that increasingly other nations would disagree, as Cohen admitted, "in large measure what we're seeing is private Iranian citizens buying gold as a protection against the falling value of Iran's currency." It would seem somewhat self-evident that the US is admitting, by attempting to embargo this gold flow, that outside the US, the Dollar is becoming increasingly irrelevant (see China's gold demand); and that for many countries the petrodollar no longer exists, having been replaced by 'Petrogold'.

Frontrunning: May 3

  • U.S. Bulks Up to Combat Iran (WSJ)
  • Taking sides in Syria is hard choice for Israel (Reuters)
  • Gold Traders Most Bearish in Three Years After Drop (BBG)
  • It's a Hard Job Predicting Payrolls Number  (WSJ)
  • EU economies to breach deficit limits as economic picture darkens (FT)
  • IBM Says U.S. Justice Investigating Bribery Allegations (BBG)
  • At Texas fertilizer plant, a history of theft, tampering (Reuters)
  • SAC Sets Plan to Dock Pay in Cases of Wrongdoing (WSJ) - "in case of"?
  • EU to propose duties on Chinese solar panels (Reuters)
  • Billionaire Kaiser Exploiting Charity Loophole With Boats (BBG)
  • SEC Zeroing In on 'Prime' Funds (WSJ)
  • Apple Avoids $9.2 Billion in Taxes With Debt Deal (BBG)
  • China April official services PMI at 54.5 vs 55.6 in March (Reuters)

Frontrunning: April 18

  • Apple reportedly stops placing Mac component orders (DigiTimes)
  • Apple Ordered to Remove Obscene Content From China Store (BBG)
  • Texas Ammonia-Plant Blast Kills as Many as 15 People (Reuters)
  • Boston Probe Said Focused on Person Dropping Bag at Site (BBG)
  • The Chinese cold trade war comes come to roost: US becomes Japan’s top export market (FT)
  • Berlusconi, Bersani back Marini in presidential vote (Ansa)
  • German parliament backs Cyprus bailout (Reuters)
  • China Vows Wider Yuan Movement (WSJ)
  • Morgan Stanley Sees Core Earnings Weaken (WSJ)
  • Gold Miners Lose $169 Billion as Price Slump Adds ETF Pain (BBG)
  • G-20 Draft Affirms Pledge to Avoid Competitive Devaluations (BBG)
  • IMF warns on risks of excessive easing (FT)
  • The battle for the Swiss soul (Reuters)

Goldman Activates The Magic 8 Ball, Can Now See The S&P 500 In 2015 (At 1900)

Just because Goldman's track record at predicting the near-future is so fantastic (Abby Joseph Cohen "forecasting" in March 2008 the S&P would close the year at 1500, or about 40% off), the firm that spawned a thousand central bankers and ambassadors, has decided to try its hand at really long-term stock predictions. As in "three years over the horizon" long. And, of course, it's only uphill from here. To wit: "We develop a new framework for forecasting equity returns over the medium term using a consistent approach globally. We extend our forecast horizon to the end of 2015."And the punchline: "With a 2015 horizon all regions look attractive on an absolute basis"

They Came, They Saw, They Got The Hell Out Of UBS In 7 Days

Housing is recovering. The Fed has your back. The consumer is healthy. All things that would suggest the commercial-mortgage bond business should be on the cusp of a renaissance. So the question is - what did Brett Ersoff and John Herman see, seven short days after being promoted to run the UBS real-estate finance division, that made them depart the venerable Swiss firm with the paintball sized Stamford trading floor?

Senior SAC Trader Arrested, Given Perp Walk

Hopefully the $155 million purchase of Picasso's "Le Reve" by Steve Cohen coupled with his splurge on a $60 million East Hamptons pad comes with a 30 full day money back guarantee, because very soon he may have more practical and immediate uses for the money. If the SAC head was hoping that the recent $602 million settlement his firm had reached with the SEC was enough to put all his troubles behind him, he may want to think twice. First, yesterday, New York District Judge Victor Marrero pulled a "Judge Rakoff", when he balked at the SEC’s use of the “neither admit nor deny” provision (the same argument used by Rakoff when he rejected an SEC settlement with Citigroup in 2011). Marrero also asked what would happen if Martoma, who has pleaded not guilty to related criminal charges, is convicted. “How would it look if in the settlement before it, the parties were allowed to say ‘We did nothing wrong?’” Marrero asked. “The ground is shaking, let’s admit that,” said Marrero. “This court is in the same position that Judge Rakoff was some months ago." But in the end we are sure that Marrero, just like Rakoff, will fold to pressure, and money. However, where things got interesting is that moments ago the Feds arrested long-time SAC suspect and PM Michael Steinberg, giving him a perp walk out of his Park Avenue apartment. This was the highest profile arrest so of any SAC employee and means that while the SEC may be trying to close the book on Cohen, the Feds are only now getting started.

 

SAC Unit CR Intrinsic To Pay Largest Ever Insider Trading Case Settlement: No Charges Are Admitted Or Denied

The Securities and Exchange Commission today announced that Stamford, Conn.-based hedge fund advisory firm CR Intrinsic Investors has agreed to pay more than $600 million to settle SEC charges that it participated in an insider trading scheme involving a clinical trial for an Alzheimer’s drug being jointly developed by two pharmaceutical companies.   The settlement filed today in federal court in Manhattan is the largest ever in an insider trading case, requiring CR Intrinsic – an affiliate of S.A.C. Capital Advisors – to pay $274,972,541 in disgorgement, $51,802,381.22 in prejudgment interest, and a $274,972,541 penalty. “The historic monetary sanctions against CR Intrinsic and its affiliates are sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm,” said George S. Canellos, Acting Director of the SEC’s Division of Enforcement. The settlement is subject to the approval of Judge Victor Marrero of the U.S. District Court for the Southern District of New York. The settlement would resolve the SEC’s charges against CR Intrinsic and the relief defendants relating to the trades in the securities of Elan and Wyeth between July 21 and July 30, 2008. The settling parties neither admit nor deny the charges

How Many Billions Of Drug-Laundered Money Does It Take To Shut Down A Bank?

It's an odd question, we know - especially ahead of today's Stress Tests, but given today's testimony on assessing the bank secrecy act, apparent trouble-maker Elizabeth Warren pokes and prods (correctly we would add) at the surreality that exists between the Department of Justice, The Treasury, and the financial system. David Cohen, Tom Curry, and Jerome Powell dodged bullets and blame, "does that mean essentially we have a prosecution-free zone for large banks in America?" But Warren wasn't going to be fobbed off with useless banter as she pointed out, "if you're caught with an ounce of cocaine, the chances are good you're going to go to jail... for the rest of your life. But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night - I think that's fundamentally wrong." Indeed Ms. Warren.

The Bermuda 'Reacharound' Triangle Tax Dodge

With sequesters and loopholes the only two words that seem to matter in Washington (the latter more than the former as far as action), we suspect the popularity of the so-called 'Bermuda Triangle' tax dodge may raise more than a few eyebrows. Put simply, hedge fund managers create a Bermuda-based re-insurance entity, their clients (high-net-worth individuals) funnel their hard-earned gains through this offshore entity and back to the US hedge funds - dramatically reducing their personal income taxes. The re-insurers do a minimum of business to create the appearance of legitimacy but are enabling hedge fund investors to avoid paying high-rate income tax on any gains from the funds and growing tax-free while in the fund. Of course this is defended as "good tax management." Funds such as Paulson's, Third Point, Greenlight, and SAC all use this vehicle according to Bloomberg as a handy way to funnel a US hedge fund investment through a tax haven. It truly is good to be king...

Frontrunning: February 19

  • Here comes the replay of 2011 as China starts the counter-reflation moves: China Central Bank Reverses Cash Pump (WSJ)
  • Security group suspects Chinese military is behind hacking attacks (Reuters)
  • Iceland Foreshadows Death of Currencies Lost in Crisis (BBG)
  • China Allows More Firms to Sell Mutual Funds to Bolster Market (BBG)
  • Uncertainty looms for Italians (FT)
  • Forget the big comeback; Detroit focuses on what can be saved (Reuters)
  • SAC’s Cohen May Face SEC Suit as Deposition Hurts Case (BBG)
  • Hollande wrestles with austerity demands (FT)
  • Obama Golf With Woods in Florida Risks Muddling Messsage (BBG)
  • Simpson and Bowles to Offer Up Deficit (WSJ)
  • Aso Says Japanese Government Not Planning Foreign Bond Buys (BBG) - ... until it changes its tune once more
  • Abe to Decide on Bank of Japan Governor Nomination Next Week (BBG)

Guest Post: Adrift At Sea

The big story this past week, besides the annual State of the Delusion speech by Barack “It won’t add a cent to the deficit” Obama, was the fate of the passengers on the Carnival Triumph as their skyscraper sized ship was left adrift at sea for days without power. The ordeal at sea of the Carnival Triumph and the leadership displayed by the Carnival management and executive officers is a microcosm of our declining empire. Rather than deal with our reality, Obama chose the Carnival Cruise Line method of public relations - misinformation, denial and delusion. He has embraced the Big Lie concept as if he had created it. Our cruise of illusions and delusions is headed for troubled water. The math challenged citizens on this ship have been enjoying the 24 hour pizza buffet without the labor required to pay for the bounty. This voyage is reaching an end and the bill is coming due. The engine is on fire but the captain is telling us all is well. Eventually, everyone will know the captain lied.

Frontrunning: February 14

  • John Kerry just got happier: Berkshire Hathaway, 3G Buying Heinz for $72.50 a Share, or $28 Billion - ~20% premium to last price (CNBC)
  • US Airways, AMR to Merge (WSJ) - can thousands of workers spell "synergies"?
  • Draghi, Carney show ascent of "whatever it takes" central bankers (BBG) ... to preserve the Goldman way of life
  • Euro zone economy falls deeper than expected into recession (Reuters)
  • Soros has made $1 billion betting against the Japanese Yen (WSJ)
  • Ex-Analyst at SAC Felt Pressured for Tips  (WSJ)
  • Desalination Seen Booming at 15% a Year as World Water Dries Up (BBG)
  • China's 'Wall' Hits Business (WSJ)
  • Israel publishes some details as Australian spy mystery deepens (Reuters)
  • Tata Motors Profit Falls 52% (WSJ)
  • AB InBev Will Sell Corona Unit to Salvage Modelo Takeover (BBG)
  • "Blade Runner" Pistorius charged with murdering girlfriend (Reuters)
  • In Ohio and beyond, Obama sees model for manufacturing revival (Reuters)