Hedge fund masters of the universe in trouble. We’ll look at what’s coming out.
For most people, hedge funds used to sound like some kind of lawn service. Years of trouble in Wall Street finance have clued us in. Hedge funds are some of the sharpest investors out there. Working on the big-money edge. Take that edge too far, and you can have insider trading. Unfair advantage. Broken laws.
Right now, a huge investigation is circling around Steven A. Cohen, one of the biggest hedge fund masters of the universe. No charges against him, but a lot of billowing smoke. And an education for the little guy.
This hour, On Point: a hedge fund hero in hot water.
Peter Lattman, reporter for the New York Times’ Deal Book.
Arthur Laby, professor of law at Rutgers, where he specializes in securities law and regulation.
Robert Khuzami, director of the Division of Enforcement of the U.S. Securities and Exchange Commission.
From Tom’s Reading List
Bloomberg Businessweek “The possibility that Cohen might share the fate of fellow hedge fund billionaire Raj Rajaratnam, who was found guilty of conspiracy and securities fraud in May 2011 and sentenced to 11 years in prison, has caused a frisson of anticipation in the financial world. On Nov. 28, the president of SAC Capital, Tom Conheeney, told investors that the Securities and Exchange Commission is considering filing a civil suit against the firm.”
The New York Times “In March 1991, Michael R. Milken, once the richest and most powerful financier of his generation, entered prison, signaling the end of an era of junk bond-financed hostile takeovers and high-visibility prosecutions that law enforcement officials hoped would deter insider trading for generations.”
Forbes “Many of these convictions stemmed from the government’s ability to uncover widespread conspiracies. Raj Rajaratnam, the founder of the hedge fund Galleon Group, stood at the center of one of the largest of these insider trading networks. According to trial testimony and court documents, his web of informants provided illicit information on companies ranging from tech bellwethers like Intel and Advanced Micro Devices to banking giant Goldman Sachs. In all, nearly two dozen people associated with Rajaratnam’s insider trading scheme have pleaded guilty or have been convicted by a jury.”