Someone once said that there is no such thing as bad publicity — meaning, getting your name into print can’t ever hurt.
Hedge fund operator and serious art collector Steve Cohen, who runs SAC Capital Advisors, probably wouldn’t agree with that. The richer Cohen gets, the less he seems to want to be in the public eye.
And as an insider-trading investigation of his company — and maybe Cohen himself — goes forward, the Connecticut billionaire will probably wish he hadn’t been featured in a Business Week article in July 2003 that bore the headline “The Most Powerful Trader on Wall Street You’ve Never Heard Of.”
There’s no indication from the lengthy piece that Cohen cooperated with the author, who uses a lot of unnamed sources.
But here’s one particular snippet that seems pertinent to the investigators now looking into how Cohen’s firm trades stocks and whether it has an illegal advantage:
“And while most of his rivals struggle to keep their trading costs down, Stevie, as he’s known on Wall Street, is one of the few to pay full freight. He hands over about $150 million a year in commissions to Wall Street, making him one of its 10-largest customers,” said Business Week back then.
What does Cohen get for these high commissions?
“The payments grease the superpowerful information machine that Cohen has built at SAC,” the article continues. “The torrent of commissions wins Cohen the clout that often makes him privy to trading and analyst information ahead of rivals.”
“Says one analyst, ‘I call Stevie personally when I have any insight or news tidbit on a company. I know he’ll put the information to use and actually trade off it.”
Business Week said Cohen expects to be called by analysts when they change their rating on a stock. And if he isn’t called, “offenders have been known to get a tongue-lashing from SAC traders.”
It seems like just a hop, skip and jump from there to getting information that can be considered proprietary, which can get even the richest Wall Street guy in trouble.
But there are two other things I’d like to bring up before a third thought that is the most important.
First, if Business Week could dig up this information on Cohen a decade ago why are investigators only now getting around to looking into SAC Capital?
Second, how hypocritical is it for prosecutors to go after Cohen if the government refuses to look into the possible release of inside information to Wall Street by then-Treasury Secretary Hank Paulson as well as by Tim Geithner when he was head of the New York Fed?
Compared to what Paulson and Geithner probably leaked during the 2007 financial crisis, Cohen was playing in a sandbox.
The third and last thing I wanted to mention was something else in the Business Week story. Cohen is said to have developed a love for business statistics and trading because “as a child, he followed sports scores assiduously in the New York Post that his father would bring home every night,” according to the article.
Isn’t that the cutest little fact?
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Remember what I said a few columns back: the stock market is showing signs of irrational exuberance given all the financial problems in the world.
Yesterday the Dow Jones industrial average fell 216.40 points because of concern about budget cuts in the US, the Italian election and the fact that the world is a dangerous place economically.
Be careful!
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A reader complained that I never say anything good about the economy.
Anyone who is paying attention would realize that saying something good would require me to lie to you — since very little has been going right with the economy for the last five years. Plus, I figure you can get all the Pollyanna talk you want from CNBC.
But, after mulling it over for a while, I did come up with something nice to say: This economy sure is exciting!
Look, when I was trained as a journalist I was told to always be skeptical. If a politician said one thing, you’d better check to see if he is right.
If Wall Street thinks one way, you’d better see if someone has a different take on things.
The problem is, Wall Street dominates the conversation in this country. When a reporter needs a comment about anything related to business or the financial markets he/she usually goes to someone on Wall Street.
That’s like going to a car salesman to ask about cars. The chances are good that you aren’t going to get an honest answer.
The truth about the US economy has been the same for years. It is in trouble. I said it before the trouble became apparent, and I’m not going to lie to you now.
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I was food shopping the other day and came upon an item that I found interesting in this day and age — tissues printed to look like $100 bills.
These were nose tissues, not the ones used to wipe your — you know — toilet tissues.
I couldn’t tell if this item was merely symbolic, or also prophetic. If the Federal Reserve’s decision to print trillions of extra dollars in its Quantitative Easing experiment goes wrong then pretty soon we might be using real currency for wiping our nose.
john.crudele@nypost.com