As noted yesterday, Stevie Cohen is a target of the FBI/SEC investigation.

Marketwatch is reporting that SAC Capital Advisors LP told investors in a letter that it got a government subpoena, according to a person who received the update from the hedge fund firm.

SAC said in the letter, dated Nov. 23, that the government served identical “extraordinarily broad” subpoenas on a number of investment managers of different sizes and descriptions, including SAC . . . The firm said the subpoenas don’t “shed much light on whom or what the government may be investigating.”

So much for a slow newsweek.

I have no idea how Cohen trades, but the rumors are already pinging around trading desks that where there is smoke, there is fire.

Call me old school, but innocent until proven guilty is still the law. If SAC is found guilty, you can tar and feather them, but until then, I’d rather reserve judgment until the evidence is out there (No, we don’t no any business with them).


On a less serious note, since the holiday season is about to kick off, for the hedgie on your list, the Brooks Brothers Wired collection is certain to be all the range amongst the 2 and 20 crowd. (Credit: Josh Brown )


Category: Humor, Legal

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

29 Responses to “Sac-ked !”

  1. AHodge says:

    my winner of the legal communication prize for this flap
    some one i think at “diamondback”
    email to all his customers telling the story of FBI visitors, their “wear a wire” request.
    guess it aint wrong to warn your friends that way….

  2. dcsos says:

    That begs the question…if you’re being investigated, isn’t there some disclosure that you’re being investigated
    that you must do?
    That is to say…don’t these guys legally need to reveal this turn of events immediately when authorized to?

  3. steven says:

    SAC is almost all Steve’s money, apparently, so if there’s trouble he can pay fines with petty cash.
    There isn’t the implosion possible at places with low cash balances and all external money like Janus.

    (I’m still not sure whether the authorities are prepared to put people away for crimes. Given, the FBI’s not the SEC dealing with GS or such like for a bit of pocket money and raison d’etre.)

  4. Casblanca says:

    That benefit of the doubt is unusually generous of you. I normally see you ready to throw these people in jail.


    BR: I was referring to the traders who are already writing him off. I want to send people to jail when we have a substantial amount of evidence, so far, all we know is the Feds have been after Cohen for the better part of a decade.

    Goldman Sachs and the Fabulous Fab was easy; and if you go back and read what i wrote, it was “If what the government alleges is true, than they are toast.”

    Note also the differences between violations of civil law (above) and criminal law (below).

    As to the Robosigners — that is an automatic. If you sign 400 documents per day swearing under oath that you have reviewed all of the details of thefile, verifiied the note, validated the last payment, double checked the name, address, signature, mortgage, etc. — it is impossible NOT to have committed fraud. The files require 30-90 minutes a piece — 400 per day is Fraud per se — its impossible for it to be anything else but.

  5. Steve Hamlin says:

    BR: “innocent until proven guilty is still the law.” Says the guy who wants to lock up TBTF bank execs for fraud, and believes the mortgage servicers are a RICO enterprise even thought the AGs are still gathering facts. (BTW – I agree with you on all counts).

    “Innocent until proven guilty” is the law, in a criminal trial, before the government takes your freedom away. “Beyond a reasonable doubt” is taken to mean about 95% sure. In civil courts, including civil regulatory enforcement actions, it’s either “clear and convincing” (~75%), or normally, a “preponderance of the facts” (51%). The court of public opinion is less forgiving to the accused than that. And all of those rules assume you start off believing the accused probably didn’t do it.

    Since I’m not the judge or jury, I’ll go on believing that most of those investment managers DID do what they government alleges, and feel quite comfortable believing that. Doesn’t mean the gov’t won’t have to prove their case, but it also doesn’t mean I am out line believing that they did it without a criminal conviction to back me up.

    I believe Goldman done wrong, but surely you don’t mean it’s improper to have such a belief short of a criminal conviction? The only people we can castigate are those criminally convicted?


    BR: See the comment above

  6. AHodge says:

    Dunno, not a lawyer, but i be really surprised if either
    wear a wire requests need client disclosure
    immediate is a requirement.

  7. dead hobo says:

    That suit isn’t right. The waist and chest need to be switched around to fit the physiques of most people today. While I may be a trim and fit individual, even I couldn’t wear that coat. Even the Old Navy mannequins would have issues. Do wall streeters commonly wear girdles? Is that an explanation that fits the fit?

  8. Chief Tomahawk says:

    BR, have you read W’s memoirs for his commentary on the financial crisis? Have you generated a blog post where you made your thoughts public? Just curious. At some point I aim to give it a look over at my local library…

  9. ewmayer says:

    We obviously don’t know yet what information the Feds are acting on, but ZeroHedge published some rather specific questions to SAC back on 4. November, which they reprise in their update on the story today:

    Barry, obviously in a court of law the standard is innocent until proven guilty. But given the revelations in the past several years about the real “secrets of success” of some of the biggest names on Wall Street – John Paulson hand-picking worst-of-the-worst crap to stuff into Goldman’s abacus CDO and then betting big against it without that being disclosed to buyers of the toxic sludge (I still am baffled as to how Goldman pays the fine and Paulson is considered innocent in the matter), Warren Buffett turning into the biggest bailout whore in history (and not a single person from Moody’s yet put on trial for fraud), and on and on – I’m inclined to say that at least as far as the court of public opinion is concerned, it is not unreasonable to apply a standard (to paraphrase Heinlein’s Razor) of

    “Never ascribe to financial genius that which is adequately explained by insider information.”

  10. sherman says:

    Anyone noticed that his wife accused him of insider trading some time ago???

  11. dead hobo says:

    Did you get a subpoena? It looks like only the really ‘In’ asset managers rate one this year? If not, then why the hell not? Were you quick like a bunny or just too far out of the loop to matter? Will Wall Street investment managers start posting signs line “No Subpoenas for xxx Days” like factories post signs about the frequency of accidents? Or will signs like “xxx Subpoenas Served since 2010″ be a measure of return?

  12. Bokolis says:

    Given that many have long suspected that what he’s been accomplishing is too good to be true, we can all have a howl at his expense before anyone goes about trying to prove anything.

    It doesn’t detract from your assessment but, regardless of the clarifications, your words in the post read as offering Cohen atypical courtesy/reverence. Hence, a few groans come your way.

  13. Mannwich says:

    Citadel too? Let’s face, BR, most of the system that you’re also a part of is a rotten, steaming pile of dung.

    We are still nowhere until trust (or least collective delusion – can we please pull the curtain back?) comes back into the system.

  14. dead hobo says:

    Mannwich Says:
    November 23rd, 2010 at 4:56 pm

    We are still nowhere until trust (or least collective delusion – can we please pull the curtain back?) comes back into the system.

    Dreamer. The pinnacle of society to date are breakfast buffets with unlimited bacon. An honest Wall Street will happen long after cats in heat start singing opera via genetic manipulation and are highly sought after for their pleasant company.

  15. Mannwich says:

    @dead hobo: OK, not honest. I’ll drop that dream. Can we go back to the PERCEPTION (or delusion) of honesty then? ;-)

    That’s far more pleasant to think about.

  16. mbelardes says:

    “the subpoenas don’t shed much light on whom or what the government may be investigating.”

    Derrrr, yeah I don’t think they would really be designed to. The FBI is going to watch to see who starts panicking and zero in on them. Just wait until the place gets raided. God forbid someone gets led out in cuffs or they bring the paddy wagon. Then they’ll have a spotlight on whom or what the government may be investigating.

    Doesn’t really matter though. The outflows are going to tank the firm. If you are a client and you read that the FBI is raiding other hedge funds and then they are sending subpoenas to the one that manages your money, safe to say people will pull.

  17. Mannwich says:

    I’ll maintain my cynicism that nobody of any real consequence will go down here. Yawn. Alert me when a truly big fish from a TBTF gets led out in handcuffs.

  18. dead hobo says:

    Mannwich Says:
    November 23rd, 2010 at 5:13 pm

    I’ll maintain my cynicism that nobody of any real consequence will go down here. Yawn. Alert me when a truly big fish from a TBTF gets led out in handcuffs.


    Don’t be cynical, be happy. If this thing really takes off, the non farm payroll may eventually show a .1% or .2% jump in government employment because the DOJ needs a few temps to handle the overflow. Think of it as a jobs program. Remember CETA? Everyone will benefit from the dollars in circulation.

  19. * Sigh *

    . . . If only I had ever mentioned that the system was corrupt. How could I have missed that?

    [Sarcasm off]

  20. Alex says:

    Could this be the first fruits of the generous SEC informant compensation scheme?

    Because this smells a lot like an investigation triggered by an informant the Fed’s really believe.

  21. ewmayer says:


    “Come and see the violence inherent in the system. Help! Help! I’m being repressed!”

    [Python Monty off]

  22. mbelardes says:

    BR, I still disagree with you that the Goldman Case was as slamdunk as you claim but I continue to think that case was a fishing expedition leading to a bigger case, whether it is against Goldman, Sac or some other entity or group of individuals is another question.

    Hopefully not George Soros or he might take over the country before the case is filed!

  23. Jim Greeen says:

    OFF TOPIC: “An Inside Job” is a must see!!!!!!!!!!!!!!!!!!!

  24. “Alert me when a truly big fish from a TBTF gets led out in handcuffs.”

    there’s a Grand Gulf between these ‘Hedgies’/’Fund Managers’ and the Operators at the TBTFs..

    this, regardless of their technical indiscretions, of the ‘Hedgies’/’Fund Managers’, is another example of the ‘Banks’ using the “Gov’t” they’ve purchased to bludgeon their Competitors..

  25. Sechel says:

    Has anyone discussed the messy divorce. I have not heard this brought up…

  26. obsvr-1 says:

    over the last few years the press and blog posts have been full of “investigate and prosecute the criminals, banksters that pervade wall street” … Now we have the FBI issuing subpoenas and doing office raids and some how this is bad ?? All we ask is the law to be followed, both by the businesses and enforcers. It has become apparent that there is more corruption and criminal behavior within the FIRE sector than what one would find at a mafia homecoming. Wall St is a target rich environment for the SEC and DOJ — next they should go after K-street for all of the paid for political favors — a.k.a. bribery.

  27. hammerandtong2001 says:

    The dismanteling of the Wall Street edifice continues…

    As noted earlier on this thread and blog, there was a time, believe it or not, that all of finance, insurance, B/D and I/B comprised a mere 9% of Fortune 5000 profits.

    In 2007, it was over 35%.

    There was a time when the business of America was making, producing, manufacturing, inventing and BUILDING. Not shuffling debt from homeowners to Ireland, and insuring that debt, and betting against the debt ever paying out.

    That’s not a business model. Or a platform.

    I agree with a previous post on this blog. The United States is, indeed, on the road to recovery.

    And we will have reached that point when business has returned to its mission, and finance has reverted to its inherent position of serving business and earning a reasonable and fair profit, or 9% of net for the Fortune 5000.

    We have about a decade or so to go.


  28. Is the trader’s head in that picture to scale?

    It seems about right to me