Levine on Wall Street: Cohen's Loyal Lieutenants
Steve Cohen was good at his business
Sheelah Kolhatkar has another fascinating SAC Capital article in Bloomberg Businessweek. I confess that I do not have the ... character? lack of character? ... to work in the insider trading business. Per Kolhatkar, Cohen's lieutenants "had hidden from Cohen where they were getting their information," presumably to avoid tainting him with their illegal knowledge; that's why they're going to jail and he's not. I would have done the opposite: "Boss, I got this from my buddy in investor relations at the company, that's okay right? You'd tell me if it were illegal right? Right?" But I never worked at SAC. Mathew Martoma did, and he's refused to cooperate with prosecutors against Cohen. I learned here that he once wrote an email to Cohen and others saying:
SAC is a special place to me. Having attended graduate and undergraduate programs at Harvard, Stanford and Duke; founded/sold my own healthcare company; and worked as a Director at the largest federally funded science initiative in the last 3 decades, I have a variety of experiences to compare against my time at SAC. Through it all, it's clear to me that I am in my element here at SAC.
That is some embarrassing stuff right there, but the point is that whatever Cohen was doing to cultivate his employees' loyalty, it really really worked.
Codere is a little more bankrupt.
I am no expert in Spanish insolvency law but I gather that Codere SA's decision to enter the "preconcurso de acreedores" process would be the sort of thing that would trigger a credit default swap payment. That is not so relevant to Codere, since its CDS was all triggered in September, but it might be relevant to your view of that transaction, in which -- to recap -- Blackstone's GSO Capital unit bought Codere CDS and then agreed to lend Codere money if Codere would commit a technical default on its bonds. Codere missed a payment by a few days, CDS triggered, Blackstone took profits, and Codere got its money. And it's now entering creditor protection "three days before Codere must repay almost 130 million euros of loans to GSO Capital Partners LP and Canyon Capital Partners LLC." So that trade looks a little less brilliant for GSO and Canyon. Especially since they probably don't have any CDS protection any more.
There were some more mortgage settlements .
Citigroup paid $250 million to Fannie Mae and Freddie Mac over bad mortgage-backed securities. General Electric paid $6.25 million, which hardly seems worth bothering with. Ally Financial paid $475 million. This isn't exactly new news -- "Citi, GE and Ally had previously settled the claims in 2013, but none had disclosed the financial terms." Though I mean who is keeping track, honestly; there is nothing more boring and repetitive than these mortgage settlements and if you've read this far you're probably an algorithm.
Try not to commit wire fraud and traffic violations .
It is a slow week for financial news but a wonderful week for stories of people fleeing their financial frauds. First there was that Kazakh embezzler arrested in the South of France, and now there is Aubrey Lee Price, who faked his death to get out of wire fraud charges. He was in the wind for 18 months before being pulled over by cops for having illegally tinted windows on his car, which is not exactly James Bond level stuff though who knows they are doing weird things with that franchise recently. He was in sort-of disguise when he was caught, but you'll have to judge his before and after shots for yourself. Bess Levin at Dealbreaker is unimpressed by his disguise of "James Lipton Meets Dave Navarro," but on the other hand his current look is quite a contrast with his old look, and does not exactly scream "slick fraudulent banker."
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Matthew S Levine at firstname.lastname@example.org