October 25, 2013
If, according to a Viennese wit, psychoanalysis is the disease that calls itself the cure, then Steve Cohen’s deal with the US government is the highway robbery that calls itself justice.
Cohen is a bald Wall Street hedgie whose $18-billion fund, SAC, has scored Madoff-like returns the last twenty-odd years. He is a secretive kind of guy whose first wife blew the whistle on him because of his lack of generosity toward her. (Funny how cheap guys never learn. Always be nice to your ex.) Out of the 18 billion big ones Cohen manages, nine are his own. He piled them up during these last twenty years along with some very serious art—expensive, that is—the sort of collection a vulgarian such as him is expected to own.
Cohen’s company’s name is SAC, and the government has charged eleven of his former employees with insider trading. Six of the eleven have pleaded guilty to criminal charges. Cohen himself is negotiating with the feds, which is the point of my story. I remember when serious bankers speaking off the record and telling me when I complained about their returns to my investments, that if I wanted an SAC type of performance I should look elsewhere: “We know he’s insider trading, and we know how he’s doing it, and one day the feds might wake up,” or words to that effect.
Cohen returned 30 percent annually to his investors, piling up his billions along with hundreds of works of art, buying and selling the latter for tax reasons as he could defer his tax liability by exchanging one piece for another. (This is what art has become.)
Uncle Sam has called SAC “a magnet for market cheaters.” Two of Cohen’s major lieutenants are going on trial soon, but Stevie-baby is smarter than that. He’s dealing with the good uncle, which makes me mad as hell. Uncle Sam should require that Cohen gives every ill-gotten gain back or else take him to trial. Word is out that Cohen might return two billion, a record fine, which leaves him with seven billion big ones. Plus the art, not a bad little saving as they say. In settling, Cohen is seeking to resolve both the criminal case against him plus any lawsuit the SEC might come up with. In other words, the bum will insulate himself against any future problems and will be free to play basketball in his Greenwich, Connecticut home where he has built a court inside his art-laden mansion. (He’s short and fat and bald but is reputed to have a mean hook shot.)
The lesson in all this is that crime pays. The government is looking at the fine that Cohen will pay rather than looking at what Cohen has accumulated by his alleged cheating. And Stevie, as some insiders call him, seems to be playing with the feds. Late last year, just as his two top men were arrested, he feigned innocence and went out and bought Picasso’s “Le Rêve” from casino owner Steve Wynn for $155 million big ones. Cohen also owns “great art” such as Damien Hirst’s shark submerged in a tank of formaldehyde. If one can judge a man by his art collection, you’ve got the message by now.