Will Steve Cohen Face Criminal Charges?

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July 25 (Bloomberg) -- Attorney Mike Bowe, with Bloomberg's Greg Farrell and Sheelah Kolhatkar discuss the indictment of SAC and the possibility that founder Steve Cohen could be charged. They speak to Deirdre Bolton on Bloomberg Television's "Money Moves." (Source: Bloomberg)

Mike, you had a client that seven years ago you had to go head-to-head with sac capital, steve cohen.

The client was fairfax financial.

Seven years ago tomorrow, the anniversary, it filed a racketeering lawsuit against sac alleging really what is in the indictment today, that sac is run as a criminal organization and makes profits by insider trading . part of the significance is, one of the messages from today from the news conference is, the fbi representatives said they don't put a target on anyone's back.

The day after we found out the fairfax case, we had calls from that office of the fbi.

They wanted to walk to that complaint and that evidence.

They started working on that case then, as far as i know and have been working on it for seven years not because they had a target on anyone's back in particular.

This was an organization that when they were investigating, they found tons and tons of evidence that this is how it is run.

So this is of zero surprise deal?

-- to you?

Zero surprise here it -- surprise.

To play devil's advocate, what about this culture of when you are part of a big hedge fund and you have returned such as this, it almost seems like you have to skate close to the line if you're going to be competitive.

What do you make of that ethical argument or non-ethical argument?

In the big picture, every trader wants to get the edge.

That is become an explosive word in this context because of how it is used.

It used to be something in the marketing materials at sac capital.

But without going across the line.

The government has alleged that they were way across the line and there was no supervision at the top.

The allegations are that that was a sickly just lip service and the compliance team never really engaged -- strictly just lip service and the compliance team never really engaged.

They went after these supervision complaints because they could not go after steve cohen directly?


Sheila, i'm going to bring you in on the point that many of us are thinking about.

We see this criminal indictment against the hedge fund itself.

What are the chances that steve cohen personally faces criminal charges?

That's the question at the top of a lot of people's minds, especially mr.

Cohen right now.

When asked at the press conference, he did not respond directly.

A said, i am not saying what tomorrow brings.

-- he said, i am not saying what tomorrow brings.

We still don't know for sure how that is going to play out.

You mentioned your client, fact -- fairfax.

Where does that litigation stand now?

I'm curious if it shows us the breadth and depth of sac capital's illegal defense.

-- illegal defense -- legal defense.

Is on appeal now.

In your opinion, based in all your years of experience, what do you think the chances are that steve cohen faces criminal charges?

Based on the arc of this going back six years and the relentlessness of the prosecution of other individuals at galleon, former director of goldman sachs, i don't think they're going to stop here and say it's enough.

If there is a curve in all case to be built, they're going to try to get it.

I would say north of five out of 10. i would say nine because you can't predict anything with certainty.

They have been working this case for seven years.

They have been working it hard and have had enormous amounts of resources.

The fbi and the attorney's office devoted these resources.

There is a mountain of evidence which you see in the indictments and civil forfeiture.

We have ahead of a firm and there are complaints people not doing their job.

All of this information goes directly to cohen.

He's in the middle of the hub.

When you see an indictment, you see the u.s. attorney in a press conference, this was a criminal operation essentially and all the evidence goes to cohen, i don't think they're going to stop.

They are running the table on cohen.

The sec is going to attempt to bar him from the industry.

I think this puts a tremendous amount of pressure on everyone else on the periphery about whether it is time to get on board.

One of the messages the government is sending, this person is not going to be around to help you.

Do you want to be on that team, or our team?

I want to come back to what you just alluded there.

She look, i want to go back to you in the meantime.

Were talking about how basically between the fed, the sec, the table is being run against steve cohen.

What are people there saying about -- by all accounts, he is super serious and super focused?

He would not have started this if he did not think he could get steve cohen?

There were many points in this investigation where he could have decide, i i did my job and i sent the message.

But his office has continued to push and they have devoted tremendous resources to this investigation.

It is clear that cohen is the ultimate person they wanted to get and they would still very much like to charge him.

They believe he has been doing things he should not be doing at his firm.

I think this indictment of the firm is in the knowledge meant that they don't quite have the goods to make a criminal case on him.

That was their first choice.

I agree with what mike and greg have said.

There is no indication that they are giving up on him personally.

I have heard there are other irons in the fire that will still play out.

Speaking of those other irons in the fire, you alluded to martoma.

If martoma fled, it becomes likely that steve cohen could be facing criminal charges.

What are the chances of that happening?

For many people, that is been a big puzzle piece.

Amoco -- there is a narrative that took hold.

Sac's people were feeding it into their clients that as long as they got past the martoma thing, this would go away.

And if he could hold together, he might save steve cohen.

Somewhere in the future, that might be a benefit to him.

I think right now the government is sending a big message that that will not happen.

We talked about how this is a shot across the bow for almost the entire industry.

A foregone conclusion, that the hedge fund will have to be closed and steve cohen can continue to manage his own money but not have a business.

To what extent do you think the entire hedge fund industry now has to pay attention to the new tone at the sec?

I think the entire hedge fund industry started paying clear attention in 2009 and 2010. this continuing surge of roll up of peripheral characters.

One of the interesting details regarding richard lee is that one of the acts to which he pleaded took place in november of 2009. even after this event occurred at sac, that did not go unnoticed.

That is part of the factor in their seriousness about pursuing this end of the case.

Think, greg farrell.

This text has been automatically generated. It may not be 100% accurate.


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