It’s Time for Obama to Bite the Hedge-Fund Sharks
There’s nothing like a good insider-dealing story, and this could be one of the biggest since Rudy Giuliani, then an aggressive young U.S. attorney on the make, took down Ivan Boesky twenty-five years ago. The man in the dock is Mathew Martoma, a little-known thirty-eight-year-old hedge-fund trader who stands accused of generating two hundred and seventy-six million dollars by trading in the stocks of two health-care companies on the basis of information supplied by a neurologist involved in a clinical trial of a new Alzheimer’s drug. But it is pretty clear that the prosecutors’ ultimate target is Martoma’s former boss: Steven A. Cohen, the founder and driving force of the eponymous S.A.C. Capital, one of the world’s most successful hedge funds.
Cohen, a secretive trader whose stock-picking acumen has turned him into a billionaire many times over, has long been associated with unsubstantiated rumors of insider trading, including some circulated by his former wife. An eager art collector, he keeps Damien Hirst’s famous tiger shark suspended in formaldehyde, which he reportedly bought for twelve million dollars, in his office in Stamford, Connecticut. Long known as one of Wall Street’s most effective predators, Cohen evidently thinks that is a good joke, as well as a good investment. But now he is the hunted one, and the sharks circling him are getting ever closer.
The principal one is Preet Bharara, Giuliani’s latest successor as U.S. attorney. Bharara’s long-running insider-trading investigation has already sent to jail some big names, including Rajat Rajaratnam, another hedge fund manager, and Rajat Gupta, a former head of McKinsey and member of the board at Goldman Sachs. (George Packer wrote about Rajaratnam’s trial for the magazine.) In the past couple of years, four people associated with S.A.C. have been charged with insider trading, and one has pleaded guilty. But this is the first case that involves Cohen directly.
Read more: newyorker.com