In 2010, Cohen decided he would personally get involved in macro trading -- the strategy of betting on currencies, commodities and interest rates that made George Soros his fortune. He added a roughly $700 million in macro investments to his own account, which at the time had about about $3.5 billion, including borrowed money.
“I always understood macro but now I’m heavily involved in those markets,” Cohen said in May 2011 at a hedge-fund conference in Las Vegas sponsored by SkyBridge Capital LLC.
While Soros is a renaissance man interested in philosophy, economics, politics and philanthropy, Cohen has few passions and interests outside of trading, people who know him say, a trait that on occasion has caused him embarrassment.
At a January 2011 dinner held during the World Economic Forum’s annual conference in Davos, Switzerland, Cohen found himself seated next to then-European Central Bank President Jean-Claude Trichet. As Cohen, who is also known for his self- deprecating sense of humor, tells the story, he talked with Trichet all through dinner, referring to him repeatedly as Francois. He didn’t realize his error until dessert was served, when he spied Trichet’s name tag.
While Cohen is one of the most important collectors of modern art in the U.S., his friends say that it’s part of his drive to generate a profit rather than a love of art itself. It also serves as an icebreaker and topic of conversation for the shy Cohen, they say. While the late Roy Neuberger, founder of Neuberger Berman, bought thousands of pieces of art and never sold a single one, Cohen regularly trades his collection. He’s seeking to sell about $85 million worth of art at Sotheby’s later this month.
One area where people who know him say he’s shown a great passion is the plight of veterans coming back from war. Cohen co-chairs a veterans committee at New York-poverty-fighting charity Robin Hood Foundation. Robert, his son from his first marriage, enlisted in the Marines and was sent to Afghanistan. Cohen, speaking at a Robin Hood event in May 2012, told the audience that his son was doing fine, though “many of his former comrades are not.”
Last year, Cohen and his wife gave a $17 million grant to New York University’s Langone Medical Center for the Steven and Alexandra Cohen Veterans Center for the Study of Post-Traumatic Stress and Traumatic Brain Injury.
While Cohen was trading art, building out his business and giving away money, SAC’s troubles with the government began to get worse after the October 2009 arrest of Galleon’s Rajaratnam. Insider-trading charges filed against former SAC employee Richard Choo Beng Lee thrust SAC into the probe-related headlines. Lee pleaded guilty to crimes committed after leaving SAC and agreed to cooperate with the government to avoid prosecution.
Names of other former SAC employees and their firms soon after surfaced amid a growing web of defendants rounded up by prosecutors who used wiretaps and informants to build their case.
FBI raids on hedge-fund firms and a slew of arrests followed, including that of former SAC money manager Donald Longueuil, who tried to destroy evidence of his crimes by taking pliers to his computer drives and then venturing out in the middle of the night to dump them in garbage trucks around Manhattan.
There was little respite for Cohen; he was also accused by his ex-wife of insider trading in a lawsuit about their divorce, while a Brooklyn rabbi tried to extort millions of dollars from SAC by threatening to disclose insider trading at the firm. In September, a federal judge granted a request by lawyers for Patricia Cohen to amend the suit for a third time, while the rabbi was convicted of extortion and blackmail in November 2010.
Scrutiny on SAC culminated in November when FBI agents arrested Martoma in an insider-trading case that put Cohen directly in the government’s crosshairs. The charges caused SAC’s clients including Citigroup Inc.’s private bank to rush for the exits, pulling billions of dollars. Executives at SAC, which had $15 billion of assets at the beginning of the year, expect the firm to start 2014 with $9 billion, most of that Cohen’s.
While yesterday’s settlement crushes Cohen’s dreams of joining the ranks of Buffett and Soros, he will still be worth around $7.2 billion after paying his fine. More important, he will still be able to do what he’s loved since his college days -- trading.