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Sac Capital Advisors’ Steve Cohen may be seeing his tight-fisted grip on the best of his firm’s super-smart traders loosening just a bit.
It’s not that Cohen’s employees are running for the exits — net yet, anyhow — but hedge fund recruiters in the last week said they’re starting to see signs that the rock-solid allegiance of these top-shelf traders, who help keep the 56-year-old billionaire art-lover up to his Picasso in fine art, is softening.
Traders who recently blew off recruiters looking to pitch them on leaving Cohen’s $14 billion Stamford, Conn., firm are now at least hearing them out.
“They aren’t saying ‘get me out of here,’ because they haven¹t gotten paid yet,” said one recruiter who asked not to be named. “They are saying, ‘If you can find me a deal, I’m more open now to talking.’”
Last month, SAC brass told investors and employees that the firm could be sued by the Securities and Exchange Commission tied to the insider-trading arrest of a former employee.
SAC said the SEC’s warning letter, known as a Wells Notice, centered on Mathew Martoma, a former trader with SAC’s CR Intrinsic unit who has been accused of trading on confidential drug data.
Also, while Cohen hasn’t been charged with any wrongdoing and wasn’t named in the SEC warning, he was referenced in Martoma’s criminal charges as having participated in the trade, which prosecutors say earned SAC a whopping $276 million, the largest single insider-trading profit.
The criminal probe of alleged SAC actions and the regulatory pressure from the SEC could be the reason some of the firm’s traders may be thinking about life after Cohen.
Bob Olman, president of Alpha Search Advisory Partners, a hedge-fund executive search firm, said, “During our dialogues with candidates, they are voicing concerns. We can say we’re hearing from some of the people that there is a concern that . . . the scrutiny and the investigation may continue a long time.”
An SEC action or criminal charges against Cohen could force SAC to shut down. That would hurt traders still at the firm.
“There is almost no compelling reason for a hedge fund to hire someone coming out of a firm that’s been shuttered, that’s blown up, that is controversial,” Olman added. “It makes you nuclear.”
To be sure, Olman said he has seen no noticeable uptick in résumés from SAC since Martoma’s arrest.
Michael Castine, a recruiter at executive search firm Korn/Ferry International, also confirmed that he is not seeing a widespread move by SAC traders to bolt. SAC has been a target of the government’s insider trading crackdown for so long, he noted, that employees are nearly immune to it by now.
“SAC seems to have been a target for quite some time and they’ve been through this before,” he said of Cohen’s roughly 1,000 employees. “I guess it’s safe to say nobody’s reached out to say, ‘Get me out of here.’”