careless whispers

Insider-Trading Investigation Probes Steve Cohen’s ‘Big Book,’ But Not Steve Cohen

Court filings submitted in a sweeping insider-trading case against two former managers at
secretive” hedge fund SAC Capital reveal that prosecutors are examining trades made in the “Cohen Account,” a $3 billion stock portfolio account known internally as the “Big Book.” The account is personally managed by billionaire SAC founder Steve Cohen, he of the hot temper, messy divorce, and fine-art-buying binges. The book works in two easy steps: (1) Portfolio managers send their best trading ideas to Cohen; (2) SAC pays them a bonus if their tips pay off. But although SAC has been subpoenaed, neither the firm nor Cohen have been accused of any wrongdoing. What’s at issue is whether the former managers, Donald Longueuil and Noah Freeman, who have both pleaded guilty, used the same inside information to suggest trades for the Cohen Account.

The filings don’t allege that Cohen knew his managers’ rationale for recommending trades. But the Feds must have figured if Longueuil’s cover-up method included tearing hard drives apart with pliers and dumping them in random garbage trucks at two o’clock in the morning — Freeman’s get-out-of-jail card included wearing a wire while his best friend said this — then who knows what they’re capable of.

The SAC has been subpoenaed two times in connection with this investigation, last fall and again in February. In fact, for more than two years the Feds have been trying to get trading information about SAC, a firm that’s managed to rake in average annual returns of 30 percent for nearly two decades. This filing is the first time the Big Book has been tied to the case.

The development comes the same day as sources say Cohen has become the front-runner for a minority stake in the Mets, but no word on whether it would hurt his chances. Better bring those SAC fleeces to work. We have a feeling Cohen’s going to crank the thermostat even lower than its standard frigid 69 degrees.

Probe Eyes Trades by Fund Titan
Who Is Steve Cohen? A Glimpse Into SAC Capital’s Top Dog [Deal Journal/WSJ]
Investigators Eye Cohen’s Trades In Insider Case [FIN Alternatives]
Hedge funder Steve Cohen frontrunner to buy minority stake in Mets [NYP]
Earlier: Steve Cohen’s Hedge-Fund Managers Charged With Insider Trading, Cinematic Cover-up

Insider-Trading Investigation Probes Steve Cohen’s ‘Big Book,’ But Not Steve Cohen