Steven Cohen May Return to Hedge Fund Industry When Ban Expires
Steven A. Cohen, a billionaire investor barred from managing money for others, is one step closer to making his return to the hedge fund industry.
Mr. Cohen, whose former hedge fund pleaded guilty to insider trading charges, has confirmed that a new investment firm he opened this year will probably begin raising money from outside investors in early 2018.
“I think we’re leaning that way,” Mr. Cohen, 60, said in a recent interview at his office in Stamford, Conn. “But we haven’t made a final decision.”
Mr. Cohen, considered by many to be one of the most successful stock traders of his generation, said he expected to make that decision in the next three to four months.
There has been strong speculation on Wall Street that Mr. Cohen would again look to raise money from outside investors once a regulatory settlement that bars him from managing money from others expires in 2018. The prohibition was part of an agreement Mr. Cohen reached with the Securities and Exchange Commission this year that was separate from the guilty plea entered by his former $14 billion hedge fund, SAC Capital Advisors.
Mr. Cohen caused a bit of stir when he quietly formed a new investment firm called Stamford Harbor Capital to manage $100 million belonging to his $11 billion family office — Point72 Asset Management.
The new firm was established and registered with the S.E.C. as an investment adviser this year — a precursor to managing outside money.
Senator Elizabeth Warren, Democrat from Massachusetts, sent an angry letter to the S.E.C. in April, saying that approval of the new firm had made “a mockery” of the agency’s mission to protect investors.
“While Stamford Harbor could currently manage outside money, it has chosen not to do so and instead to defer that decision until 2018, assuming the firm continues to fully comply with all of the terms of the recent S.E.C. settlement,” said Jonathan Gasthalter, a spokesman for Stamford Harbor.
But despite the controversy, Mr. Cohen has continued to move toward plotting his return to the hedge fund business, an arena he dominated for roughly two decades.
This summer, Mr. Cohen tapped one of his longtime employees — Perry Boyle — to run the new firm. Mr. Boyle runs Stamford Harbor in a building located on the other side of the parking lot from Point72’s headquarters in Stamford, which formerly housed SAC Capital.
Mr. Cohen, according to regulatory filings, owns more than 25 percent of Stamford Harbor “through intermediate entities.”
Beyond the reputational damage, the insider trading investigation that dogged Mr. Cohen and his former hedge fund for years has barely caused him to miss a beat.
His family office, formed as SAC began to wind down its operations in 2014, employs about 1,000 people — not too many fewer than Mr. Cohen’s old hedge fund did during its glory days.
SAC paid $1.8 billion in fines to federal prosecutors and securities regulators. But in 2014, Point72 generated a gross profit of $2.5 billion to $3 billion.
Point72, which is not registered with the S.E.C., also manages some money for Mr. Cohen’s senior employees.
Mr. Cohen has tried to portray Point72 as being a different animal from SAC and having learned from its entanglements with prosecutors and regulators. The firm’s website says Point72 adheres “to the highest ethical standards.”