Michael Steinberg seems like a good father. The portfolio manager for SAC Capital’s Sigma unit, who was charged with insider trading on March 29, was so concerned about being arrested in front of his two young children that he started staying in hotels several weeks ago in the hopes that he would be picked up there, according to a person familiar with the multi-agency investigation currently under way into illegal trading on Wall Street. Still, it’s difficult to outsmart the government: Agents escorted Steinberg out of his $8 million Park Avenue apartment in handcuffs, on Good Friday, at the FBI witching hour of 6 a.m., right after he returned from a vacation with his family in Florida, where his wife and kids had stayed behind. Steinberg had hoped to turn himself in, according to the person familiar with the investigation, but the FBI stopped allowing defendants to do that because it seemed unfair to let wealthy Wall Street traders be brought into custody with dignity while others aren’t afforded the opportunity. Later in the day, both the Securities and Exchange Commission and prosecutors for the Southern District of New York charged Steinberg with insider trading in two technology stocks, Dell (DELL) and Nvidia (NVDA), in 2008, 2009, and 2010.
The most pressing question now is what this means for SAC founder Steven Cohen, who has long been seen as the ultimate person of interest in the investigation.
One day in 2008, David Munno decided to vent to his boss. Munno, a health-care analyst then employed at SAC Capital Advisors, was mystified as to why the hedge fund was building up large positions in drug companies Elan and Wyeth. The positions were unhedged, which made the trades even riskier. And there was no obvious strategic explanation, other than that a relatively untested 34-year-old portfolio manager named Mathew Martoma had been pushing heavily for the trades.
Martoma was viewed skeptically by many of his colleagues, according to a current SAC employee who was not authorized to speak for attribution. But the one person who trusted him was the only person who mattered: SAC founder Steven A. Cohen.
Within the gladiatorial atmosphere of SAC’s offices, where dozens of the brightest and most aggressive traders on Wall Street are in constant battle for the favor of their billionaire boss, Munno and another analyst, Benjamin Slate, pressed their arguments: “ELN, (important, please read) negative reads from company and other buysiders,” said an e-mail they sent to Cohen, which was quoted in a government complaint. The e-mail, referring to the ticker symbol for Elan, listed the men’s concerns about why the drug stock was a dangerous long-term bet.
Cohen wasn’t interested—and ultimately told them he didn’t want to hear any more on the subject of Elan and Wyeth. He was sticking with Martoma.
Munno didn’t understand why Cohen was so bullish on Elan and wrote in aggravation to his supervisor, Jason Karp, then the director of research at SAC unit CR Intrinsic Investors, according to a person familiar with the inquiry that led to the complaint. Karp agreed and wrote that Martoma was acting like he had “black edge.”
A trader’s edge is his advantage; it’s the work he’s done and the things he knows about a company. “Black edge,” according to people familiar with the inquiry, is likely a term for information that cannot be doubted and that no one else has. It’s the kind that can make a trader millions and the kind that can put a trader in jail.
A profile of former General Electric CEO Jack Welch–Republican party surrogate, management pundit and 77-year-old multi-platform attention-getter–for the November 23 issue of Bloomberg Businessweek.
From the piece:
In conversations with friends, Welch calls himself retired, but retirement Jack Welch-style is very different than retirement for most business moguls. At one end of the spectrum is Bill Gates, who quit running Microsoft to battle malaria and poverty in the developing world; at the other are entrepreneurs who found wellness centers, ex-chiefs who bankroll the search for extraterrestrial life, and John McAfee, the antivirus software pioneer on the lam in Belize. In between are dozens of less colorful lives lived by corporate elder statesmen, such as former IBM Chairman Lou Gerstner, who hold part-time consulting gigs or business school professorships. Since September 2001, when he left GE, Welch has forged his own, singular path, a sort of unretirement-as-reality-show cast by himself and his third wife, Suzy. Says Jimmy Lee, vice chairman of JPMorgan Chase and Welch’s close friend and longtime business associate: “His agenda is being Jack.”
From the September 13, 2012 issue of Bloomberg Businessweek, an in-depth look at the Massachusetts Senate race. Wall Street, in particular, is very interested in the outcome. From the piece:
Scott Brown’s race against Democratic candidate Elizabeth Warren to hold on to his Massachusetts Senate seat—formerly occupied by Ted Kennedy and narrowly won in a 2010 special election—has become one of the most closely watched congressional elections in the country, as well as the most expensive, with more than $53 million raised so far, according to the Center for Responsive Politics. Much of Wall Street, in particular, is determined to see Brown reelected.
At stake is the vote that could alter the balance of power between Democrats and Republicans in the Senate, as well as a position of symbolic importance. The race is about two very different views of America’s economic future. For the Wall Street bankers, hedge fund managers, and private equity executives from New York, Connecticut, and elsewhere who are pouring money into Brown’s campaign, it’s also about something much closer to their hearts: stopping Elizabeth Warren. The Harvard Law professor, former head of the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP) and driving force behind the Consumer Financial Protection Bureau in Washington, has become the populist champion of government restraint of Wall Street. When asked why he thought Wall Street had become so active on behalf of Brown, Massachusetts Representative Barney Frank says: “Two words: Elizabeth Warren.”
From the 2012 Republican Convention in Tampa, FL, an exclusive dispatch from inside a meeting of Karl Rove’s Super PAC, American Crossroads:
From the piece:
On the final morning of the Republican National Convention, Karl Rove took the stage at the Tampa Club to provide an exclusive breakfast briefing to about 70 of the Republican Party’s highest-earning and most powerful donors. During the more than hour-long session, Rove explained to an audience dotted with hedge fund billionaires and investors—including John Paulson and Wilbur Ross—how his super PAC, American Crossroads, will persuade undecided voters in crucial swing states to vote against Barack Obama. He also detailed plans for Senate and House races, and joked, “We should sink Todd Akin. If he’s found mysteriously murdered, don’t look for my whereabouts!”
Then Rove pleaded with his audience for more money—much more.
From the July 19, 2012 issue of Bloomberg Businessweek: Nothing strikes fear into the heart of a corporate general counsel like a call from celebrity attorney Gloria Allred. Is she a women’s rights crusader, a cynical profiteer, or both?
From the piece:
Gloria Allred believes there’s an epidemic of sexual harassment and discrimination against women in companies across America. “Grabbing women by the butt. Putting their hand down their shirt. Groping their breasts,” she says over dinner one night in New York, describing the cases she hears about all the time between bites of branzino, no butter. Allred’s compact, ageless body is sheathed in a melon-colored jacket that pops off a TV screen, and she barely blinks when she speaks. “Putting their hand up into their private, genital area. And grabbing,” she continues. “Forcing them to watch pornography. Taking them on business trips and making sure they come into their bedroom. Making promises that are never kept. It is truly revolting.”
Allred, 71, is a partner at the Los Angeles law firm Allred, Maroko & Goldberg and a self-described avenger for women’s rights. There’s no one term that captures exactly what she does: Part activist lawyer, part publicist, she’s an unavoidable presence on cable TV who provides a steady stream of material to gossip websites such as TMZ.com and Radar Online. There are few people whose voice on the other end of a phone line is as likely to strike terror into the heart of a politician or a general counsel. What drives her, she says, is the ongoing “tidal wave” of abuse committed by men in positions of power. That and attention, which Allred seeks out like a starving person looking for food.
Sheelah Kolhatkar is a features editor and national correspondent at Bloomberg Businessweek and a contributor to Time Magazine, New York Magazine, The Atlantic and other publications, where she has written features and investigative stories about Wall Street, women in business, media and national politics. Read more about her here.
