SAC Says Cohen’s Ex-Wife Met With Fairfax

SAC Capital Advisors LP claimed founder Steven A. Cohen’s ex-wife met with lawyers for Fairfax Financial Holdings Ltd. before she sued him for allegedly cheating her out of money in their 1990 divorce, according to court papers.

SAC Capital, in a March 2 filing unsealed today in a Fairfax lawsuit against it and other hedge funds, said that the Canadian insurer or its lawyers may have been involved in Patricia Cohen’s suit.

“SAC has learned from reliable sources that Patricia Cohen in fact met with counsel for Fairfax prior to filing that lawsuit,” SAC said.

Fairfax, in its 2006 lawsuit in state court in Morristown, New Jersey, accuses SAC Capital and other hedge funds of conspiring to spread negative information about Toronto-based Fairfax because they were betting its stock price would decline. The funds, including Stamford, Connecticut-based SAC Capital, have denied the accusation.

“Neither Fairfax nor its lawyers had anything to do with Patricia Cohen’s lawsuit, and only learned about it from news reports,” Michael Bowe, a lawyer for Fairfax at Kasowitz Benson Torres & Friedman LLP in Manhattan, said in an e-mail. “Suggestions otherwise sound paranoid.”

Jonathan Gasthalter, an SAC Capital spokesman, declined to comment. SAC Capital has about $13 billion under management.

Photographer: Ronda Churchill/Bloomberg

Steven Cohen, founder and chief executive officer of SAC Capital Advisors LP, speaks during the SkyBridge Alternatives conference in Las Vegas on May 11, 2011. Close

Steven Cohen, founder and chief executive officer of SAC Capital Advisors LP, speaks... Read More

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Photographer: Ronda Churchill/Bloomberg

Steven Cohen, founder and chief executive officer of SAC Capital Advisors LP, speaks during the SkyBridge Alternatives conference in Las Vegas on May 11, 2011.

Howard W. Foster, a lawyer for Patricia Cohen at Foster PC in Chicago, declined to comment. She has appealed the March 30 dismissal of her suit in federal court in Manhattan.

‘Racketeering Scheme’

In the suit, she said SAC Capital was “the product of an ongoing racketeering scheme” that has engaged in insider trading, bank fraud, money laundering and other misconduct.

SAC Capital in March 2 motions sought permission to conduct sworn interviews with a Fairfax representative and Patricia Cohen about any communications between her and the company.

Stephen M. Orlofsky, the court-appointed “discovery master” deciding evidence-sharing disputes in the New Jersey case, denied the hedge fund’s request to interview the Fairfax representative in a May 11 order. He denied the request on Patricia Cohen on April 1, according to the order.

SAC Capital has appealed the denial of its request to interview Patricia Cohen, according to Orlofsky, a former federal judge in New Jersey and a partner with Blank Rome LLP in Princeton. The appeal is pending.

The case is Fairfax Financial Holdings Ltd. (FFH) v. SAC Capital Management LLC, L-2032-06, Superior Court of New Jersey, Morris County (Morristown). Patricia Cohen’s case is Cohen v. Cohen, 11-1390, U.S. Court of Appeals for the Second Circuit (New York) and 09-cv-10230, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court at tweidlich@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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