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| black_edge [2018-04-11 21:00] – created nik | black_edge [2025-07-01 07:37] (current) – nik |
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| ====Black Edge - Sheelah Kolhatkar==== | ====Black Edge - Sheelah Kolhatkar==== |
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| <blockquote>Kang knew all of this. He liked to say that he understood the difference between “the dirty, important hedge funds,” the “dirty hedge funds you didn’t need to waste time on,” and the “not-important hedge funds.”</blockquote> | <blockquote>Kang knew all of this. He liked to say that he understood the difference between “the dirty, important hedge funds,” the “dirty hedge funds you didn’t need to waste time on,” and the “not-important hedge funds.”</blockquote> |
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| <blockquote>an investigation unlike any other in the history of Wall Street, a decadelong, multiagency government crackdown on insider trading focused almost entirely on hedge funds. It began with Raj Rajaratnam and the Galleon Group and quickly expanded to ensnare corporate executives, lawyers, scientists, traders, and analysts across dozens of companies. Its ultimate target was Steven Cohen, the billionaire founder of SAC Capital Advisors, possibly the most powerful hedge fund firm the industry had ever seen.</blockquote> | <blockquote>an investigation unlike any other in the history of Wall Street, a decade-long, multiagency government crackdown on insider trading focused almost entirely on hedge funds. It began with Raj Rajaratnam and the Galleon Group and quickly expanded to ensnare corporate executives, lawyers, scientists, traders, and analysts across dozens of companies. Its ultimate target was Steven Cohen, the billionaire founder of SAC Capital Advisors, possibly the most powerful hedge fund firm the industry had ever seen.</blockquote> |
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| <blockquote>Over time, the name hedge fund lost any connection to the careful strategy that had given such funds their name and came to stand, instead, for unregulated investment firms that essentially did whatever they wanted. Though they became known for employing leverage and taking risk, the defining attribute of most hedge funds was the enormous amounts of money the people running them were taking in:</blockquote> | <blockquote>Over time, the name hedge fund lost any connection to the careful strategy that had given such funds their name and came to stand, instead, for unregulated investment firms that essentially did whatever they wanted. Though they became known for employing leverage and taking risk, the defining attribute of most hedge funds was the enormous amounts of money the people running them were taking in:</blockquote> |
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| <blockquote>In 2006, the same year that Lloyd Blankfein, the CEO of Goldman Sachs, was paid $54 million—causing outrage in some circles—the lowest-paid person on the list of the twenty-five highest-paid hedge fund managers made $240 million. The top three made more than a billion dollars each.</blockquote> | <blockquote>In 2006, the same year that Lloyd Blankfein, the CEO of Goldman Sachs, was paid \$54 million—causing outrage in some circles—the lowest-paid person on the list of the twenty-five highest-paid hedge fund managers made \$240 million. The top three made more than a billion dollars each.</blockquote> |
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| <blockquote>By 2015, hedge funds controlled almost $3 trillion in assets around the world and were a driving force behind the extreme wealth disequilibrium of the early twenty-first century.</blockquote> | <blockquote>By 2015, hedge funds controlled almost \$3 trillion in assets around the world and were a driving force behind the extreme wealth disequilibrium of the early twenty-first century.</blockquote> |
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| <blockquote>If there was one person who personified the rise of hedge funds, and the way they transformed Wall Street, it was Steven Cohen. He was an enigmatic figure, even to those in his own industry, but his average returns of 30 percent a year for twenty years were legendary. What was especially intriguing about him was that his performance wasn’t based on any well-understood strategy, unlike other prominent investors such as George Soros or Paul Tudor Jones; he wasn’t famous for betting on global economic trends or predicting the decline of the housing market. Cohen simply seemed to have an intuitive sense for how markets moved, and he entered the industry at precisely the moment when society reoriented itself to reward that skill above almost all others.</blockquote> | <blockquote>If there was one person who personified the rise of hedge funds, and the way they transformed Wall Street, it was Steven Cohen. He was an enigmatic figure, even to those in his own industry, but his average returns of 30 percent a year for twenty years were legendary. What was especially intriguing about him was that his performance wasn’t based on any well-understood strategy, unlike other prominent investors such as George Soros or Paul Tudor Jones; he wasn’t famous for betting on global economic trends or predicting the decline of the housing market. Cohen simply seemed to have an intuitive sense for how markets moved, and he entered the industry at precisely the moment when society reoriented itself to reward that skill above almost all others.</blockquote> |
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| <blockquote>By 2012, SAC had become one of the world’s most profitable investment funds, managing $15 billion.</blockquote> | <blockquote>By 2012, SAC had become one of the world’s most profitable investment funds, managing \$15 billion.</blockquote> |
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| <blockquote>they knew how difficult it is to beat the market, day after day, week after week, year after year. Hedge funds are always trying to find what traders call “edge”—information that gives them an advantage over other investors.</blockquote> | <blockquote>they knew how difficult it is to beat the market, day after day, week after week, year after year. Hedge funds are always trying to find what traders call “edge”—information that gives them an advantage over other investors.</blockquote> |
| <blockquote>The stock market distills a basic economic principle, one that Aizer had figured out how to exploit: The more risk you take with an investment, the greater the potential reward. If there’s a chance that a single piece of news could send a stock plunging, investors expect greater possible profit for exposing themselves to those potential losses.</blockquote> | <blockquote>The stock market distills a basic economic principle, one that Aizer had figured out how to exploit: The more risk you take with an investment, the greater the potential reward. If there’s a chance that a single piece of news could send a stock plunging, investors expect greater possible profit for exposing themselves to those potential losses.</blockquote> |
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| <blockquote>All this card-playing helped Cohen learn an important lesson about capitalism. There were relatively difficult ways to make money, like working as a stock boy at Bohack supermarket for $1.85 an hour, which he did one summer and found to be excruciating. And there were much easier ways to earn a buck, like beating his friends at the poker table, which he found to be quite enjoyable.</blockquote> | <blockquote>All this card-playing helped Cohen learn an important lesson about capitalism. There were relatively difficult ways to make money, like working as a stock boy at Bohack supermarket for \$1.85 an hour, which he did one summer and found to be excruciating. And there were much easier ways to earn a buck, like beating his friends at the poker table, which he found to be quite enjoyable.</blockquote> |
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| <blockquote>Drexel’s top mergers and acquisitions banker, Dennis Levine, was arrested and charged with orchestrating a massive insider trading scheme by paying off lawyers and bankers to leak him information about takeovers and other deals. The Levine arrest was just the beginning of the unraveling of Michael Milken’s junk bond empire, an unprecedented series of prosecutions that would dominate news headlines for months.</blockquote> | <blockquote>Drexel’s top mergers and acquisitions banker, Dennis Levine, was arrested and charged with orchestrating a massive insider trading scheme by paying off lawyers and bankers to leak him information about takeovers and other deals. The Levine arrest was just the beginning of the unraveling of Michael Milken’s junk bond empire, an unprecedented series of prosecutions that would dominate news headlines for months.</blockquote> |
| <blockquote>Drexel Burnham Lambert insider trading scandal.</blockquote> | <blockquote>Drexel Burnham Lambert insider trading scandal.</blockquote> |
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| <blockquote>etween 1998 and 1999, SAC reached an important marker, surpassing $1 billion a year in assets, which was achieved after five years of almost doubling their money each year. As SAC grew, though, the drawbacks of its bare-knuckled investing approach became increasingly hard for Cohen to ignore.</blockquote> | <blockquote>Between 1998 and 1999, SAC reached an important marker, surpassing \$1 billion a year in assets, which was achieved after five years of almost doubling their money each year. As SAC grew, though, the drawbacks of its bare-knuckled investing approach became increasingly hard for Cohen to ignore.</blockquote> |
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| <blockquote>Citadel Investment Group, founded by Ken Griffin in Chicago, and Millennium Management, run out of New York</blockquote> | <blockquote>Citadel Investment Group, founded by Ken Griffin in Chicago, and Millennium Management, run out of New York</blockquote> |
| <blockquote>Elan Corporation and Wyeth, which were testing a new Alzheimer’s drug called bapineuzumab</blockquote> | <blockquote>Elan Corporation and Wyeth, which were testing a new Alzheimer’s drug called bapineuzumab</blockquote> |
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| <blockquote>the Gerson Lehrman Group, which was an “expert network” or “matchmaking” firm. The matches it made were between Wall Street investors like Martoma and people who worked inside hundreds of different publicly traded companies, people responsible for ordering new truck parts or buyers for retail chains who could provide insight on their industries, their competitors, or even their own firms. The investors paid GLG a fee to connect them with these company employees, who in turn were paid handsomely—sometimes as much as $1,000 an hour or more—to talk to the investors. The company employees were supposed to share only information that was publicly available, to avoid breaking any laws. Or at least that was the idea.</blockquote> | <blockquote>the Gerson Lehrman Group, which was an “expert network” or “matchmaking” firm. The matches it made were between Wall Street investors like Martoma and people who worked inside hundreds of different publicly traded companies, people responsible for ordering new truck parts or buyers for retail chains who could provide insight on their industries, their competitors, or even their own firms. The investors paid GLG a fee to connect them with these company employees, who in turn were paid handsomely—sometimes as much as \$1,000 an hour or more—to talk to the investors. The company employees were supposed to share only information that was publicly available, to avoid breaking any laws. Or at least that was the idea.</blockquote> |
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| <blockquote>In 2000, the SEC, deciding that such shenanigans were bad for the market, passed a rule called Regulation Fair Disclosure, often called “Regulation FD.” It prohibited public companies from offering important information about their businesses to some investors and not others. After the rule passed, companies had to tell everyone everything at the same time through public announcements and press releases. This made it much easier to get the information, but it also made the information much less useful, because everyone else had it as well. Traders had to find some other way to gain an advantage in the market.</blockquote> | <blockquote>In 2000, the SEC, deciding that such shenanigans were bad for the market, passed a rule called Regulation Fair Disclosure, often called “Regulation FD.” It prohibited public companies from offering important information about their businesses to some investors and not others. After the rule passed, companies had to tell everyone everything at the same time through public announcements and press releases. This made it much easier to get the information, but it also made the information much less useful, because everyone else had it as well. Traders had to find some other way to gain an advantage in the market.</blockquote> |
| <blockquote>Naturally, most corporate executives see the shorts as enemies of the happy stories they’re trying to tell about their companies, which tend to be full of puffery. For that reason, short sellers play a crucial role in the market, as the only actors who are motivated to look for problems at publicly traded companies—such as accounting fraud—which can be covered up for years. Short sellers were the first ones to point out problems with Enron.</blockquote> | <blockquote>Naturally, most corporate executives see the shorts as enemies of the happy stories they’re trying to tell about their companies, which tend to be full of puffery. For that reason, short sellers play a crucial role in the market, as the only actors who are motivated to look for problems at publicly traded companies—such as accounting fraud—which can be covered up for years. Short sellers were the first ones to point out problems with Enron.</blockquote> |
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| <blockquote>On February 23, 2006, Biovail filed a lawsuit against SAC, naming Cohen and a few of his employees and accusing them of manipulating Biovail’s stock. The list of defendants also included Gerson Lehrman Group. The lawsuit accused the SAC traders of working together to drive Biovail’s share price down, from close to $50 to $18 in Canadian dollars.</blockquote> | <blockquote>On February 23, 2006, Biovail filed a lawsuit against SAC, naming Cohen and a few of his employees and accusing them of manipulating Biovail’s stock. The list of defendants also included Gerson Lehrman Group. The lawsuit accused the SAC traders of working together to drive Biovail’s share price down, from close to \$50 to \$18 in Canadian dollars.</blockquote> |
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| <blockquote>Internet chat rooms were buzzing every day with talk about how Fairfax was going to collapse. Bowe watched one day as Fairfax’s stock fell after message boards were flooded with rumors that the company’s CEO had fled the country and that its offices were being raided by the Royal Canadian Mounted Police. Fairfax was founded by Prem Watsa, a Canadian billionaire frequently described as “Canada’s Warren Buffett” in the press. Watsa alleged that an analyst at an independent research and trading shop based in Memphis called Morgan Keegan was working in partnership with a handful of hedge funds to spread false information about Fairfax. It turned out that one of the funds was SAC Capital.</blockquote> | <blockquote>Internet chat rooms were buzzing every day with talk about how Fairfax was going to collapse. Bowe watched one day as Fairfax’s stock fell after message boards were flooded with rumors that the company’s CEO had fled the country and that its offices were being raided by the Royal Canadian Mounted Police. Fairfax was founded by Prem Watsa, a Canadian billionaire frequently described as “Canada’s Warren Buffett” in the press. Watsa alleged that an analyst at an independent research and trading shop based in Memphis called Morgan Keegan was working in partnership with a handful of hedge funds to spread false information about Fairfax. It turned out that one of the funds was SAC Capital.</blockquote> |
| <blockquote>the insider trading rings were in many ways similar to organized crime. And like crime syndicates, many of the hedge funds the FBI was looking at were secretive and hierarchical, with the lower-level workers doing questionable things while the bosses at the top maintained intentional ignorance and reaped most of the benefits</blockquote> | <blockquote>the insider trading rings were in many ways similar to organized crime. And like crime syndicates, many of the hedge funds the FBI was looking at were secretive and hierarchical, with the lower-level workers doing questionable things while the bosses at the top maintained intentional ignorance and reaped most of the benefits</blockquote> |
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| <blockquote>Just as the financial crisis hit, SAC reached its peak, with close to 1,200 employees and almost $17 billion in assets, half of which belonged to Cohen and his employees. Since its founding in 1992, the firm had gone through several reinventions: first a day-trading shop staffed with Cohen’s college friends; then a more professional operation with Ivy League types; and finally a research and intelligence-gathering machine filled with analysts who specialized in different industries. Its final expansion had been the most ambitious. Cohen had pushed the company into every corner of the market, opening offices in Asia and Europe, launching a private equity unit to take stakes in private companies, and starting a bond trading group, an area he knew little about but that now accounted for a quarter of his fund. SAC’s returns had averaged 30 percent over the previous eighteen years, an impossibly high level of performance that was several times greater than the average market return. Cohen was one of the richest men in the world, worth nearly $10 billion.</blockquote> | <blockquote>Just as the financial crisis hit, SAC reached its peak, with close to 1,200 employees and almost \$17 billion in assets, half of which belonged to Cohen and his employees. Since its founding in 1992, the firm had gone through several reinventions: first a day-trading shop staffed with Cohen’s college friends; then a more professional operation with Ivy League types; and finally a research and intelligence-gathering machine filled with analysts who specialized in different industries. Its final expansion had been the most ambitious. Cohen had pushed the company into every corner of the market, opening offices in Asia and Europe, launching a private equity unit to take stakes in private companies, and starting a bond trading group, an area he knew little about but that now accounted for a quarter of his fund. SAC’s returns had averaged 30 percent over the previous eighteen years, an impossibly high level of performance that was several times greater than the average market return. Cohen was one of the richest men in the world, worth nearly \$10 billion.</blockquote> |
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| <blockquote>Self, by the conceptual artist Marc Quinn</blockquote> | <blockquote>Self, by the conceptual artist Marc Quinn</blockquote> |
| <blockquote>They were known around Wall Street as Cohen’s “henchmen,” because they had the thankless task of burning other people in the market each day on behalf of their boss. At the same time, they had to try to maintain good relationships with those same people so that they could get access to information and the flow of trading activity each day. It was an awkward job.</blockquote> | <blockquote>They were known around Wall Street as Cohen’s “henchmen,” because they had the thankless task of burning other people in the market each day on behalf of their boss. At the same time, they had to try to maintain good relationships with those same people so that they could get access to information and the flow of trading activity each day. It was an awkward job.</blockquote> |
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| <blockquote>For years, Wall Street had made billions of dollars off the booming housing market and the baffling array of mortgage products and derivatives that emanated from it. Certain that the value of their homes would only go up, millions of Americans borrowed recklessly against them, aided and abetted at every step by the financial industry. Between 2000 and 2007, Wall Street had made more than $1.8 trillion worth of securities out of subprime mortgages. Now all of that looked suspect.</blockquote> | <blockquote>For years, Wall Street had made billions of dollars off the booming housing market and the baffling array of mortgage products and derivatives that emanated from it. Certain that the value of their homes would only go up, millions of Americans borrowed recklessly against them, aided and abetted at every step by the financial industry. Between 2000 and 2007, Wall Street had made more than \$1.8 trillion worth of securities out of subprime mortgages. Now all of that looked suspect.</blockquote> |
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| <blockquote>Into the midst of this tumultuous environment stumbled Mathew Martoma, the new healthcare portfolio manager at SAC’s CR Intrinsic unit. Martoma wanted to prove himself. On June 25, 2008, he instructed his trader, Timothy Jandovitz, to start accumulating shares of the pharmaceutical companies Elan and Wyeth</blockquote> | <blockquote>Into the midst of this tumultuous environment stumbled Mathew Martoma, the new healthcare portfolio manager at SAC’s CR Intrinsic unit. Martoma wanted to prove himself. On June 25, 2008, he instructed his trader, Timothy Jandovitz, to start accumulating shares of the pharmaceutical companies Elan and Wyeth</blockquote> |
| <blockquote>The article had a shocking number of details about what the FBI and the SEC were doing—things that up until then had been completely secret. It identified the expert network firm PGR as one of the main targets of the investigation. It mentioned a handful of drug companies the government was looking at. It also reported that Richard Grodin, C. B. Lee’s former boss at SAC, had received a subpoena. For the government, it was a devastating leak that would alter the course of the investigation.</blockquote> | <blockquote>The article had a shocking number of details about what the FBI and the SEC were doing—things that up until then had been completely secret. It identified the expert network firm PGR as one of the main targets of the investigation. It mentioned a handful of drug companies the government was looking at. It also reported that Richard Grodin, C. B. Lee’s former boss at SAC, had received a subpoena. For the government, it was a devastating leak that would alter the course of the investigation.</blockquote> |
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| <blockquote>One, a consultant named Doug Munro—nickname “10k”—ran a company called World Wide Market Research. Munro maintained an email account under the name JUICYLUCY_XXX@yahoo.com; in it, Munro would compose emails containing inside information about Cisco and other companies but leave them in the “drafts” folder, where they supposedly would not create an email trail. Barai paid him around $8,000 a month, and Freeman paid him, too; in return, both had the password to the email account.</blockquote> | <blockquote>One, a consultant named Doug Munro—nickname “10k”—ran a company called World Wide Market Research. Munro maintained an email account under the name JUICYLUCY_XXX@yahoo.com; in it, Munro would compose emails containing inside information about Cisco and other companies but leave them in the “drafts” folder, where they supposedly would not create an email trail. Barai paid him around \$8,000 a month, and Freeman paid him, too; in return, both had the password to the email account.</blockquote> |
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| <blockquote>Barai, Freeman, and Longueuil</blockquote> | <blockquote>Barai, Freeman, and Longueuil</blockquote> |
| <blockquote>Tim Jandovitz, had left Wall Street and was living in Chicago, where he’d started a high-concept sandwich shop that was based around a special waffle bread he had developed. He hoped it would become the next Chipotle.</blockquote> | <blockquote>Tim Jandovitz, had left Wall Street and was living in Chicago, where he’d started a high-concept sandwich shop that was based around a special waffle bread he had developed. He hoped it would become the next Chipotle.</blockquote> |
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| <blockquote>On a purely financial basis, Steinberg’s case was minuscule. Under normal circumstances, the government probably wouldn’t have even bothered to charge him. He was alleged to have made only $1.4 million on his illegal trades—a tiny amount compared to the $276 million Martoma case. But the arrest sent an important message. It was the first time that someone close to Cohen was dragged out of his home in handcuffs. Unlike most of the others charged until that point, Steinberg was like Cohen’s son.</blockquote> | <blockquote>On a purely financial basis, Steinberg’s case was minuscule. Under normal circumstances, the government probably wouldn’t have even bothered to charge him. He was alleged to have made only \$1.4 million on his illegal trades—a tiny amount compared to the \$276 million Martoma case. But the arrest sent an important message. It was the first time that someone close to Cohen was dragged out of his home in handcuffs. Unlike most of the others charged until that point, Steinberg was like Cohen’s son.</blockquote> |
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| <blockquote>Securities fraud had a five-year statute of limitations.</blockquote> | <blockquote>Securities fraud had a five-year statute of limitations.</blockquote> |
| <blockquote>major investment banks like Morgan Stanley, JPMorgan Chase, and Goldman Sachs, the ones that had earned hundreds of millions of dollars in commissions from Cohen over more than a decade, refused to abandon him during his time of darkness, even though his company had been branded a criminal enterprise and Cohen himself was still at risk of criminal prosecution. It was virtually unprecedented in the financial industry. Mainstream Wall Street looked at the agency that stood for law and order and ethics in their field and at the most profitable trader they had ever worked with and then pointed at Cohen and said, “We choose you.”</blockquote> | <blockquote>major investment banks like Morgan Stanley, JPMorgan Chase, and Goldman Sachs, the ones that had earned hundreds of millions of dollars in commissions from Cohen over more than a decade, refused to abandon him during his time of darkness, even though his company had been branded a criminal enterprise and Cohen himself was still at risk of criminal prosecution. It was virtually unprecedented in the financial industry. Mainstream Wall Street looked at the agency that stood for law and order and ethics in their field and at the most profitable trader they had ever worked with and then pointed at Cohen and said, “We choose you.”</blockquote> |
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| <blockquote>Again, comparisons with Michael Milken, in many ways Cohen’s precursor, seemed appropriate. In 1989, Milken’s firm Drexel Burnham Lambert had pleaded guilty to securities fraud and agreed to pay a $650 million fine. The SAC deal was similarly impressive. For Americans who were still confused and upset about why nobody had been held legally responsible for the crimes that led to the financial crisis of 2008, the case against Cohen’s company was something different: a clear, unequivocal victory for the forces of fairness and integrity.</blockquote> | <blockquote>Again, comparisons with Michael Milken, in many ways Cohen’s precursor, seemed appropriate. In 1989, Milken’s firm Drexel Burnham Lambert had pleaded guilty to securities fraud and agreed to pay a \$650 million fine. The SAC deal was similarly impressive. For Americans who were still confused and upset about why nobody had been held legally responsible for the crimes that led to the financial crisis of 2008, the case against Cohen’s company was something different: a clear, unequivocal victory for the forces of fairness and integrity.</blockquote> |
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| <blockquote>Martoma had been given ample opportunity to testify against his former boss in exchange for a lighter sentence, and he had refused. Instead, he went through a humiliating trial and now faced more than ten years of jail time. Why? It was the question that surrounded his case for three years.</blockquote> | <blockquote>Martoma had been given ample opportunity to testify against his former boss in exchange for a lighter sentence, and he had refused. Instead, he went through a humiliating trial and now faced more than ten years of jail time. Why? It was the question that surrounded his case for three years.</blockquote> |
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| <blockquote>Cohen had been working to cleanse his reputation on Wall Street as well, trying to create distance between himself and the legal scandal. As required by the criminal settlement with his company, Cohen had closed SAC and turned it into a private family office that invested only his own money, close to $10 billion. It was important to him, that $10 billion figure.</blockquote> | <blockquote>Cohen had been working to cleanse his reputation on Wall Street as well, trying to create distance between himself and the legal scandal. As required by the criminal settlement with his company, Cohen had closed SAC and turned it into a private family office that invested only his own money, close to \$10 billion. It was important to him, that \$10 billion figure.</blockquote> |
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| <blockquote>In December 2014, an appeals court overturned the convictions of Todd Newman and Anthony Chiasson, from Diamondback and Level Global, respectively, funds that had strong ties to SAC. The judges reprimanded Bharara’s office for being too aggressive in charging traders who were getting inside information indirectly, from friends or employees, rather than from the company insider himself.</blockquote> | <blockquote>In December 2014, an appeals court overturned the convictions of Todd Newman and Anthony Chiasson, from Diamondback and Level Global, respectively, funds that had strong ties to SAC. The judges reprimanded Bharara’s office for being too aggressive in charging traders who were getting inside information indirectly, from friends or employees, rather than from the company insider himself.</blockquote> |
| <blockquote>Meanwhile, the prosecutors and regulators involved in building the case against Cohen and SAC have moved on to more lucrative careers.</blockquote> | <blockquote>Meanwhile, the prosecutors and regulators involved in building the case against Cohen and SAC have moved on to more lucrative careers.</blockquote> |
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| <blockquote>Lorin Reisner, the head of Bharara’s criminal division who helped negotiate SAC’s $1.8 billion fine, became a partner at Paul, Weiss, the same law firm that supplied Cohen’s legal defense team. Antonia Apps, the prosecutor who tried the Steinberg case, left the government for a partnership at Milbank, Tweed, Hadley & McCloy, another corporate law firm where she does white collar defense work. Bharara’s deputy, Richard Zabel, announced that he was taking a job as general counsel at a hedge fund called Elliott Management, which is run by the prominent billionaire political donor Paul Singer. After twenty-five years with the FBI, B. J. Kang’s former supervisor, Patrick Carroll, joined Goldman Sachs as a vice president in its compliance group. Arlo Devlin-Brown, who led the Martoma prosecution, became a partner at Covington & Burling. The most startling move of all, however, came from Amelia Cottrell, a senior enforcement attorney at the SEC who oversaw the agency’s Martoma investigation. At the end of June 2015, she shocked her colleagues by announcing that she was joining Willkie Farr, the firm where Cohen’s longtime defense counsel Marty Klotz worked. It turned out that leading the most powerful case the government assembled against Cohen was the best possible audition for a job working for his consigliere.</blockquote> | <blockquote>Lorin Reisner, the head of Bharara’s criminal division who helped negotiate SAC’s \$1.8 billion fine, became a partner at Paul, Weiss, the same law firm that supplied Cohen’s legal defense team. Antonia Apps, the prosecutor who tried the Steinberg case, left the government for a partnership at Milbank, Tweed, Hadley & McCloy, another corporate law firm where she does white collar defense work. Bharara’s deputy, Richard Zabel, announced that he was taking a job as general counsel at a hedge fund called Elliott Management, which is run by the prominent billionaire political donor Paul Singer. After twenty-five years with the FBI, B. J. Kang’s former supervisor, Patrick Carroll, joined Goldman Sachs as a vice president in its compliance group. Arlo Devlin-Brown, who led the Martoma prosecution, became a partner at Covington & Burling. The most startling move of all, however, came from Amelia Cottrell, a senior enforcement attorney at the SEC who oversaw the agency’s Martoma investigation. At the end of June 2015, she shocked her colleagues by announcing that she was joining Willkie Farr, the firm where Cohen’s longtime defense counsel Marty Klotz worked. It turned out that leading the most powerful case the government assembled against Cohen was the best possible audition for a job working for his consigliere.</blockquote> |
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| <blockquote>The financial industry has evolved to be so complex that large parts of it are almost completely beyond the reach of regulators and law enforcement. Wall Street’s most successful enterprises are constantly pushing into the frontier; every time the law looks like it’s catching up, they move farther away. There is a perception that in the years after the Milken era, and especially since the financial crisis of 2008, it has become almost impossible, due to a lack of will or expertise, to prosecute corporate criminals who operate at the highest levels.</blockquote> | <blockquote>The financial industry has evolved to be so complex that large parts of it are almost completely beyond the reach of regulators and law enforcement. Wall Street’s most successful enterprises are constantly pushing into the frontier; every time the law looks like it’s catching up, they move farther away. There is a perception that in the years after the Milken era, and especially since the financial crisis of 2008, it has become almost impossible, due to a lack of will or expertise, to prosecute corporate criminals who operate at the highest levels.</blockquote> |
| <blockquote>Years later, after paying the largest fines in the history of financial crime—and seeing a dozen of his employees implicated in insider trading—Cohen emerged from the crisis that engulfed his company as one of the world’s wealthiest men. In the end, the evidence against him that the government spent nearly ten years assembling was never presented to a jury. All that was left was for Cohen to spend his billions and to plan for his return.</blockquote> | <blockquote>Years later, after paying the largest fines in the history of financial crime—and seeing a dozen of his employees implicated in insider trading—Cohen emerged from the crisis that engulfed his company as one of the world’s wealthiest men. In the end, the evidence against him that the government spent nearly ten years assembling was never presented to a jury. All that was left was for Cohen to spend his billions and to plan for his return.</blockquote> |
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| <blockquote>Now Cohen is making more money than ever. In 2014, trading only his own fortune, he earned $2.5 billion in profit, more than paying back the fines he was ordered to hand over to the U.S. government. Then, on November 8, 2016, Donald Trump was elected president, vowing to usher in a new era of financial deregulation. The general counsel for Point72, Cohen’s private investment firm, was appointed, briefly, by the incoming Trump administration to recruit candidates for the new Justice Department during the tumultuous transition. In the meantime, Cohen is making plans to reopen his hedge fund as soon as possible.</blockquote> | <blockquote>Now Cohen is making more money than ever. In 2014, trading only his own fortune, he earned \$2.5 billion in profit, more than paying back the fines he was ordered to hand over to the U.S. government. Then, on November 8, 2016, Donald Trump was elected president, vowing to usher in a new era of financial deregulation. The general counsel for Point72, Cohen’s private investment firm, was appointed, briefly, by the incoming Trump administration to recruit candidates for the new Justice Department during the tumultuous transition. In the meantime, Cohen is making plans to reopen his hedge fund as soon as possible.</blockquote> |
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| <blockquote>CAST OF CHARACTERS At the time of the events depicted</blockquote> | <blockquote>CAST OF CHARACTERS At the time of the events depicted</blockquote> |
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