Presenting Steve Cohen's Complete Unsealed Confidential Deposition Transcript
Over the past two days, Reuter's Matt Goldstein and Jennifer Ablan have been poring over a formerly confidential transcript of one Stevie (but don't call him that) Cohen, better known as the man who created "information arbitrage", the investor's "edge" and made expert networks very rich, if only briefly. For their extended series on the topic read here, here and here. And while they have done an admirable job of compiling the tasty morsels so far, there is far more here than meets the eye so we open it up to our extended and very much erudite financial audience to find that one slip which the various AGs and DAs have been unable to isolate in years of alleged investigatoring. As Goldstein says: "there is plenty of great and illuminating stuff in the 242 pages of deposition testimony Reuters obtained through a court motion to unseal documents in the civil lawsuit. As we noted in our story, Cohen is pressed at great length for his views on insider trading—he thinks the laws are “vague”. And as we highlighted in our blog, there’s even an amusing little feud between the lawyers over how the SAC Capital founder should addressed. Still, it makes you wonder what was said by Cohen in the more than 400 pages of deposition transcript that wasn’t unsealed. And we’d love to see Cohen on videotape as sometimes body language can be revealing." Perhaps a key point of focus is whether Stevie has himself received tips from the likes of Hank Paulson in the past about future government policy - something we know has already happened albeit with people closer to his Goldman Diaspora, a ring the former Gruntal trader never felt too comfortable with. Because it appears there certainly are hints in that regard, and if indeed proven that SAC was among the "preferential" funds of the administration in its market moving ways, then there would be no surprise why any attempts to find wrongdoing at SAC have so far been duds.
As Reuters notes:
One of the more intriguing tidbits in the deposition is a very brief line of inquiry by Fairfax’s lawyer about whether Cohen had an early discussions in September 2008 about the Federal Reserve’s plan to backstop the commercial paper market. The Commercial Paper Funding Facility, or CPFF, was one of the most important steps taken by the Federal Reserve to keep liquidity following in the financial system after the collapse of Lehman Brothers.
Indeed, between July 2007 and the failure of Lehman Brothers, the relative use of commercial paper fell 10 percentage points, according to a research paper by the Federal Reserve Bank of Dallas. The Fed’s CPFF program, which was announced in October 2008, “helped prevent commercial paper from imploding by as much as it did in the 1930s,” the paper added.
When asked by Fairfax’s lawyer if he or someone on his team was given a heads up on the CPFF, Cohen responds, “I don’t remember that.” He then goes on to say, “I’m not a credit person.” (see page 352 of transcript).
The line of questioning appears to have continued but it’s not in the excerpted transcript obtained by Reuters. Maybe nothing more came of it, given Cohen said he didn’t know anything about it.
For the time constrained, here are some choice selections from the deposition exchange:
LAWYER V. LAWYER
BOWE: Okay. So the compliance manual — you have authority, Stevey Cohen, to ignore the compliance manual?
KLOTZ: Object to the form. And I particularly object to the obnoxious, deliberate use of “Stevey” in addressing Mr. Cohen.
BOWE: It wasn’t deliberate. It was a mistake.
KLOTZ: No, it was intentional.
BOWE: Knock it off. How do you know?
KLOTZ: Because I know.
BOWE: I know you’re trying to be a tough guy in front of your client, but why don’t you knock it off? I know you’re trying to be tough — defend your big client. I understand that. This was a mistake.
BOWE: I’m sorry I used the word “Stevey” if I offended you.
COHEN: “I’m not a big client.”
ON THE TERM ”EDGE”
BOWE: Mr. Cohen, are you familiar with the term “edge”?
COHEN: “Yes, I am.”
BOWE: That’s a word that you use at S.A.C., correct?
COHEN “I hate that word.”
BOWE: What’s that word mean?
COHEN: “It just means that somebody believes that in a particular situation, stock, that the word suggests that somehow their expectations are different than either investors’ expectations or Wall Street’s expectations.”
BOWE: They think know something everyone else doesn’t, right?
COHEN: “You know, I think that’s an over — I think that’s an incorrect characterization of the word.”
ON HIS WEB OF CONTACTS:
BOWE: Okay. Well, back in 2002 through 2006, your group, at that point in time did you talk to other funds?
COHEN: “I talked to — I’ve always talked to very few funds.”
BOWE: Which funds then — which funds did you typically talk to?
COHEN: “I might talk to my friend, Jay Goldman, he’s someone I might talk to. I might talk to –
BOWE: What fund is he at?
COHEN: “Jay Goldman Associates. Who else do I talk to? I might talk to — I mean, I might — it’s not something I did a lot. I mean, very few funds. I talked to a friend of mine, Ken Ginsberg, who is an old friend from high school. And then very rarely would I talk to somebody in other firms, but it certainly happened.”
BOWE: Okay. Since it happened so rarely, can you tell me what funds?
COHEN: “Well, I mean, Adam Sender, I mean there were times in my career where I’ve spoken to him.”
BOWE: Okay, what other funds?
COHEN: “You know, there might have been a few communications with Dan Loeb in my career.” Certainly Kingdon, I can remember talking to somebody over there.”
The full transcript is below: