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Steve Cohen's SAC May Face Criminal Charges

Tyler Durden's picture


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."

Don't worry about Stevie though: the probability that he will spend even an HFT nanosecond in prison, let alone ever be forced to pay restitution in a "victimless crime" is virtually nil, because collecting 3 and 50 for decades buys a lot of lawyers. A lot of lawyers who are well versed with the legal system's latest loophole: deferred-prosecution.

SAC and its lawyers have also discussed with federal prosecutors the possibility of alternatives including negotiating a deferred-prosecution agreement, in which criminal charges could be filed against the company and basically settled at the same time, the people said.


Deferred-prosecution agreements often include specified facts regarding the circumstances of the alleged criminal violation, fines and onerous conditions such as an outside monitor of a company's operations.


Such deals spare the defendant the damage of a criminal prosecution, and charges usually are dismissed later if the company abides by the agreement and avoids trouble.

That said, even a limited criminal escalation will likely mean the exit of all outside investors, with BlackStone as the likely catalyst (and other FoFs to follow):

Some big investors have grown increasingly concerned about the vulnerability of SAC to the criminal investigation, according to people familiar with the matter.


The company's new policy of silence about the probe is likely to deepen those concerns. After reviewing their investing guidelines or seeking advice from superiors, some clients have concluded they can no longer invest with the hedge-fund firm.


SAC's largest outside investor, Blackstone Group LP, has made preparations to yank $200 million to $300 million from the hedge-fund company, according to people involved in discussions about the plans.


As of March, Blackstone's asset-management unit had $550 million invested with SAC on behalf of Blackstone clients, including public pension funds.


Blackstone has been weighing the planned withdrawals for several weeks. A spokesman declined to comment. The firm's moves are watched closely by other investors because of Blackstone's heft: It had $48 billion in hedge-fund investments at the end of March.


Some other SAC clients have sought information about Blackstone's withdrawal plans, partly to assess by how much the hedge-fund firm's assets might shrink.

All of which simply means that Cohen will merely convert into a "friend, employees and family" office: at last check just the employees had billions of their own cash invested in the hedge fund.

Then again, with SAC able to generate just a 6% return through April, or far below the broader market now managed much better by Portfolio Manager Ben Bernanke, very soon no hedge fund will be needed, because with every passing day it becomes clearer that no correction will ever be allowed again. Ever. And when one does happen, no amount of "hedging" will preserve any invested capital - there will be far bigger concerns on that day...

Finally, for an amusing take of what may have been the catalyst that sent the government over the edge, we go to Charlie Gasparino who has some advice for art lovers everywhere: maybe put off that $100 million painting purchase until after the government is done investigating you...


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Mon, 05/20/2013 - 07:09 | Link to Comment koaj
koaj's picture

Will Corzine be indicted as well?

Mon, 05/20/2013 - 07:26 | Link to Comment stopcpdotcom
stopcpdotcom's picture


Mon, 05/20/2013 - 08:02 | Link to Comment King_of_simpletons
King_of_simpletons's picture

I guess proper authorities were not paid off ?!? Congressmen/women not "lobbied" enough ?!? Palms were not greased at the right time.

Mon, 05/20/2013 - 09:13 | Link to Comment kragsquest
kragsquest's picture

If I were a billionaire in deep trouble I would give so much to charity it would make people think I was the reincarnation of St. Francis of Assisi.  And I would not be spending money on luxury, that just waves a red flag for the prosecutors on how conviction will play in the papers; but, hey, these guys live in such a virtual, self-aggrandizing world, no one is going to tell them they need to change....

Mon, 05/20/2013 - 07:29 | Link to Comment williambanzai7
williambanzai7's picture

Not likely since he has obtained a Chicago diplomatic passport.

Mon, 05/20/2013 - 08:09 | Link to Comment johnnymustardseed
johnnymustardseed's picture

Seriously, every banker that is a Primary Dealer Bank and the members of the FED should all go to jail and do hard labor mining gold and silver so they can understand that money is suppose to be something other that a number punched on a computer.

Mon, 05/20/2013 - 10:31 | Link to Comment slaughterer
slaughterer's picture

Cohen will never be caught--too many pawns around him for sacrifice.   We is as well insulated as Gordon Gekko in WS1.

Mon, 05/20/2013 - 10:46 | Link to Comment Money For Nothi...
Money For Nothing ...'s picture

Errrr  didnt gordan go to Jail in end  ? just saying

Mon, 05/20/2013 - 07:15 | Link to Comment GetZeeGold
GetZeeGold's picture



Cohen thinks he's Corzine......not even close.


Cut a 10 million dollar check to the IRS constitutional suppression fund.....and they'll think about it. IRS, SEC, DOJ.....same damn thing.

Mon, 05/20/2013 - 07:12 | Link to Comment firstdivision
firstdivision's picture

Did he forbid Obama from getting to drive the zamboni?

Mon, 05/20/2013 - 07:17 | Link to Comment Bearwagon
Bearwagon's picture

Please, that's soo eighties ... millions ... don't make fools of yourselves, that's diddly-squat ... wake me up when we are talking billions ...   :)

Mon, 05/20/2013 - 08:08 | Link to Comment Bobbyrib
Bobbyrib's picture

He could just donate millions to our scumbag politicians campaign funds and all would be overlooked. This is some country and some system of "Justice."

Mon, 05/20/2013 - 07:25 | Link to Comment El Hosel
El Hosel's picture

"Madoff-esque series of proftable years".

The US "Markets" have re-written the book on cooking the books Madoff,Enron, and SAC all look like Boyscouts in comparison..... Meanwhile, back at the White House.

Mon, 05/20/2013 - 07:21 | Link to Comment apberusdisvet
apberusdisvet's picture

The real question is who did Steve piss off?  Jamie?  Lloyd?

Mon, 05/20/2013 - 07:21 | Link to Comment B2u
B2u's picture

Whatever I did, I will agree not to do it long as no charges are filed.

Mon, 05/20/2013 - 11:53 | Link to Comment waterhorse
waterhorse's picture

Whatever I did, I will agree to be much more careful next long as no charges are filed.  ; )

Mon, 05/20/2013 - 07:25 | Link to Comment spanish inquisition
spanish inquisition's picture

If you are in charge of the process, this is a great way to clear the books so any future administrations can't go after you. Like most corporations, he is currently writing the complaint and outlining the sentence for justice.

Mon, 05/20/2013 - 07:27 | Link to Comment disabledvet
disabledvet's picture

Yeah well "we've never been in a war like this either." that an offer from the Feds to plead guilty. Obviously there isn't a lawyer on the planet saying SAC should agree to such a thing. Still...there is a risk here. Be interesting to see if we hear of a counter offer "in the ether." talk of impeachment in the background, things gettin out of hand "in the District" and elsewhere, American people getting raked over the coals in this "so called recovery,"....hmmmmmm.....

Mon, 05/20/2013 - 07:37 | Link to Comment Downtoolong
Downtoolong's picture

Deferred-prosecution, aka the SEC selling out for enough money to cover the cost of their existence.

It’s all just part of the business plan now. You steal the money, then spend 10% of it on lawyers, fines, and expenses to deal with those trying to get it back. No legal admission of guilt or wrong doing; no jail time; live the high life in another country if you have to. Worst case, you just increase your fees to cover the extra cost.

O.K., from now on it’s 4 and 60%. Done. Next.

At this point it might be just as well to keep this case going forever, as a constant reminder to every investor at every level what a shithole the financial markets have become.

Mon, 05/20/2013 - 07:37 | Link to Comment yellowsub
yellowsub's picture

He's not part of the Too Big to Jail group.

Mon, 05/20/2013 - 07:55 | Link to Comment WTFUD
WTFUD's picture

"prosecutors are considering. . . ."
and i am considering whether to drop in at the titty bar this evening or purchase 5 shares in FaceBook.

Mon, 05/20/2013 - 07:56 | Link to Comment Bangin7GramRocks
Bangin7GramRocks's picture

But he is a genius! And a billionaire! Leave him alone. Don't worry Steve, this will all blow over and you can begin insider treading again in 4 years. Team America, Fuck Yeah!

Mon, 05/20/2013 - 08:00 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Classic. A "restart". Yeah sure, do over, what the heck.

If Leibniz were correct and this were the best of all possible worlds, Steve would be admiring his new painting inside a Federal Supermax facility.

As far as socio-political constructs go, switch to Voltaire.




Mon, 05/20/2013 - 08:02 | Link to Comment trentusa
trentusa's picture

Fox News just reported Cohen got a subpoena to testify this morn


Mon, 05/20/2013 - 08:09 | Link to Comment Dr Benway
Dr Benway's picture

This new thing where the regulators have to negotiate token concessions from the criminals they are supposed to deter... bizarre.

Mon, 05/20/2013 - 11:54 | Link to Comment waterhorse
waterhorse's picture

What's new about "regulators" sucking banksters' appendages?

Mon, 05/20/2013 - 08:14 | Link to Comment WTFUD
WTFUD's picture

used to be man in the street! now it's man on the street!
Name 5 & provide a brief description on each of how Obama's 5 years as CIC has done Any normal ( not connected ) person any good in their lives! Answers should be submitted on the back of a 2nd class postage stamp.

Mon, 05/20/2013 - 08:17 | Link to Comment Debt Slave
Debt Slave's picture

Milkin, Boesky, Madoff, Cohen, ... Hmm.. What could they have in common besides being criminals?

Mon, 05/20/2013 - 08:52 | Link to Comment d edwards
d edwards's picture

They're gonna nail this guy for insider trading but it's OK for members of congress and gov't to do the same thing. WTF?

Mon, 05/20/2013 - 11:58 | Link to Comment waterhorse
waterhorse's picture

Yes, it's okay for Corzine, Mozilo, Fuld, Cassano, Blankfein, Dimon, Lewis, Rubin, Paulson, Pandit,  etc.  But Lee Farkas, Raj Rajaratnum and Madoff must be punished.  They must have forgotten to pay someone off or maybe they got cheap on the pay-offs.

Mon, 05/20/2013 - 08:58 | Link to Comment Croesus
Croesus's picture

@ Debt Slave:

They're all thieves?

Or are you referring to another common vein, similar to: "What do most of the major proponents of 'gun control' have in common, such as Feinstein, Bloomberg, and Schumer?"


Mon, 05/20/2013 - 10:12 | Link to Comment Debt Slave
Debt Slave's picture

@ Croesus:


 Add Metzenbaum and Lautenberg to the proponent list and yeah, the gun control thing works.

Mon, 05/20/2013 - 16:01 | Link to Comment zipit
zipit's picture

That's not kosher, dude.

Mon, 05/20/2013 - 08:53 | Link to Comment realtick
realtick's picture

i figure out what the stock market is going to do the old-fashioned way - i chart it

What The Fuck Is The Stock Market Thinking??

Mon, 05/20/2013 - 08:53 | Link to Comment bugs_
bugs_'s picture

Stay Banned for Life!

Mon, 05/20/2013 - 09:19 | Link to Comment q99x2
q99x2's picture

Arrest him for treason. Through him out of the country. The guy is a leech.

Mon, 05/20/2013 - 10:10 | Link to Comment CharliePrince
CharliePrince's picture

time for cohen to write a few checks  and  give away some small bags of money


evreything will be charges

Mon, 05/20/2013 - 11:21 | Link to Comment Freddie
Freddie's picture

Hang this bagel boy c*nt from a lamp post.    Crozine should be on teh other lamp post.

Mon, 05/20/2013 - 12:03 | Link to Comment waterhorse
waterhorse's picture

Hanging is too good for him.  Let the public have some fun with the banksters in stocks and pillory and if the banksters survive, then bring on the tar and feathers, perp walk behind a cart while being lashed with a cat-o-9'tails and finally drawn and quartered.  Their heads can be mounted on the white house iron fence as a reminder to other FIRE sector fraudsters.

Mon, 05/20/2013 - 12:12 | Link to Comment Kastorsky
Kastorsky's picture

it's antisemitism!

Mon, 05/20/2013 - 15:59 | Link to Comment zipit
zipit's picture

Those fuckers are so busted! Now go slap them on the wrist, SEC!  Or do the full song and dance and perp walk them, burn them as witches, but then let them out early in a couple of years, a-la that Enron fucktard.

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