Steven Cohen
Anthony Effinger, Bloomberg News, November 24, 2010
SAC Capital Advisors LP, the firm that spawned several of the hedge funds tied to investigations by U.S. regulators, encourages competition.
Its founder, 54-year-old Steven A. Cohen, hires traders and gives them some SAC money to manage on their own, according to former employees. If they do well, they get more money to manage and a green light to hire analysts to help research stocks. If they do poorly, they’re out. The result is a firm composed of fiercely competitive pods, with many of the best managers eventually leaving to start their own firms, the former employees say.
The Bottom Line:
The insider trading investigation launched last week seems to be circling around Steven A. Cohen’s SAC Capital. The highly competitive structure of that firm - where successful traders are given their own portfolios to manage, instead of feeding into one centralized investment – can make it more tempting for traders to cut corners. Those familiar with SAC say the firm has a strong Compliance infrastructure and measures to prevent traders from dealing on inside information, such as email surveillance and special training sessions for SAC employees about complying with SEC rules.
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