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The Taming of the Trading Monster

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Plotkin, just 35, had been a Cohen protégé for a decade and managed $1.2 billion. Chris Procaccini and Wayne Chambless left for Highbridge. Nick Tiller, another top performer, retired to pursue charity work. Tiller ran over $1 billion, and Cohen needed the capital to cover redemptions. Departures like Tiller’s created a feeding frenzy on Wall Street. Competitors knew that Cohen had to liquidate Tiller’s large positions, which would force down the price of those stocks. So they shorted those companies, pocketing profits as the price dropped and hurting Cohen in the process. It was “scummy,” said one source, though he didn’t blame them—Cohen would have done the same.

For Cohen, the lost money was not the only depressing part. His office was his clubhouse. “He’s happy when you can get over being intimidated,” said one portfolio manager. And those who did became among his closest friends. With them he could relax. They understood what it was like to lose huge sums of money in a few minutes—and Cohen had once lost $150 million in a day.

But Cohen also knew it was better that some of his longtime friends had departed. He needed to demonstrate that his company was no longer “a magnet of market cheaters,” in Bharara’s phrase. In an internal memo clearly destined for a larger audience, Cohen boasted of a changed corporate ­culture: “We are creating a community dedicated to accountability.” Cohen contracted with a cybersecurity company named Palantir to implement its “big data” surveillance capabilities, pointing out that the company was used by the FBI and the SEC. He engaged a former federal prosecutor, Vinny Tortorella, to be his “chief surveillance officer,” a newly created post, and a former McKinsey director to work on company culture. And he paid for a government-approved monitor, Bart Schwartz, who’d previously worked on recovering Madoff losses—a connection not lost on Wall Street.

The moves garnered headlines in the press and scattered praise. But to some, they looked like elaborate window dressing. “If this had been a public company or a bank,” said a person who speaks to Cohen, “the top people would have been gone. You can change the name, but you can’t snap your fingers and say it’s a new beast, not with the same exact management.” SAC’s CEO, general counsel, and president remained at Point72. Internally, some grumbled about the continued tenure of Tom Conheeney, who’d been president since 2008 and COO before that and was perceived as an architect of the SAC culture. “A lot of people feel that he misled them,” downplaying the jeopardy to the company, said the person close to Cohen, though others felt he was just “too optimistic.”

At the Point72 offices, Cohen wore his usual jeans and sneakers and, because he kept the trading floor cold to prevent dozing off, a zip-up sweater—he had dozens of them in his office closet. Cohen continued to play the unflappable leader, as if little had changed, but he knew that SAC’s stellar performance would always have an asterisk next to it, like A-Rod’s home-run totals. Cohen could have used the changed circumstances to make a graceful exit; he could have unchained himself from the computer screens, as he’d once said he wanted. But Cohen hated that his reputation had been ruined and was determined to rehabilitate it. He needed to show people that he could win without even the suggestion of cheating—“and to do it under a microscope,” as a confidant put it.

Last year was a good start. The fund was up 20 percent. His own take was staggering, one of his best ever. He personally made $2.3 billion, according to Forbes, more than enough to cover civil and criminal penalties. Cohen clearly believed the worst was finally behind him. He knew that excursions to places like Davos were a thing of the past. But he was ready to signal that he was coming back—“relieved,” in the word of one observer. He was spotted at a Knicks game with his favorite gallerist, Larry Gagosian, and at a Sotheby’s art auction and a dinner at Robin Hood, the charity of the hedge-fund community. In the midst of his troubles, he’d resigned from its board, but he was clearly making a statement: He was still a member of the club.

“My husband is going to make it the best family office possible,” Alex told friends. “He’s doing as well as can be expected.” Alex, for one, saw a benefit in her husband’s difficult passage. It had taught him a valuable lesson. He was humbler and wiser, and realized how lucky he was, especially compared with some of his former employees. “He knows what’s important now,” she said. Steve Cohen had his freedom, his wife, his kids, his homes, a business—and $11 billion. It was something.


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