Hedge Fund Billionaire Steve Cohen Faces Charges for Failing to Supervise SAC Emplayee. The SEC’s action today said Cohen failed to supervise hedge fund SAC Capital Advisors former portfolio manager Mathew Martoma and SAC Capital Advisors executive Michael Steinberg.
Steve Cohen personally oversees about $4 billion, along with a small group of traders, in a portfolio called ‘the Cohen account’, which represents a good chunk of the estimated $6 billion he has invested with his 21 year old hedge fund.
The SEC’s action today said Cohen failed to supervise hedge fund SAC Capital Advisors former portfolio manager Mathew Martoma and SAC Capital Advisors executive Michael Steinberg.
Steve Cohen ignored the red flags and allowed Martoma and Steinberg to execute the trades’ in several stocks where the SEC found evidence of insider trading, the agency said.
The charges are not part of a civil lawsuit filed on court; rather, they are contained in an administrative proceeding.
In a statement announcing the proceeding, the SEC said it would determine a penalty during the proceeding. It is seeking to bar hedge fund mogul from the financial industry.
The 17-page administrative order charges that in the matters involving Steinberg and Martoma, Steve Cohen ‘received highly suspicious information that should have caused any reasonable hedge fund manager in Cohen’s position’ to determine whether the employees had acted appropriately.
The order also charges that Cohen ‘tagged’ some of the positions undertaken by the two men in his own portfolio, which entitled them to additional compensation.
The bulk of the allegations in the administrative order mirror previous allegations the SEC has filed in civil complaints against Martoma and Steinberg, as well as the criminal indictments against the two men.