As SAC Capital’s future hangs in the balance amid an insider trading probe and billions of dollars in potential outflows, Steve Cohen’s beleaguered hedge fund may still be interviewing junior candidates while panicked employees race to recruiters with resumes.
“We’d been getting a trickle (of SAC resumes) and now we are seeing a lot,” says one New York-based recruiter. Meantime, SAC is “still interviewing junior people, I would think mostly for research. They turn over people so fast I guess they feel there is still a need for analysis.”
The company’s website lists seven open jobs, the most recent posted May 13.
“I’m flabbergasted that they are interviewing people and I am flabbergasted that people would interview there,” the recruiter said. “We’ve been telling people for five years not to interview there.”
Comparing SAC’s debacle to the Madoff meltdown, the recruiter warned that while big firms without outside investors will hire fleeing talent, small firms with outside investment will avoid current SAC staffers like the plague.
Even if SAC and Cohen are not charged with insider trading, the firm’s employees will be “tainted” for several years and not considered for jobs at other firms, says John A. Breault, founder of recruiting firm Breault & Smith.
With so many uncertainties, SAC and Cohen may not yet have decided how to manage some 950 employees, including about 400 involved in "investment advisory functions" such as traders and analysts.
“I don't know for certain what SAC plans to do if the withdrawals are as significant as projected. Typically in these types of scenarios, businesses do carefully analyze payroll which is most often a service organization's largest expense,” says Howard J. Gross, managing director and practice leader of Boyden global executive search in New York. “The most likely reductions in force will target non-revenue generating staff positions while business development/marketing activities may actually be ramped up to help secure more revenue.”
“Conversely, people who maintain large books of business are usually safe and it would not be implausible for SAC to try to hire seasoned outsiders who can bring in business,” Gross added. “That said, it will likely be more difficult to recruit rainmakers now in light of the controversy surrounding the firm.”
Another New York-based recruiter says he suspects “marketers are running for the hills as (at least for the immediate future) they are not going to be able to raise any foreseeable capital. “
A recruiter in Greenwich, Conn., close to SAC’s Stamford, Conn., headquarters, says there will be major job cuts if Cohen ends up managing only his own money.
If SAC investors like Morgan Stanley and Blackstone Group pull out their money, others are sure to follow and Cohen will end up running a family office overseeing no more than $8 billion of his own money, a big chuck of SAC’s estimated $15 billion remaining assets under management. News reports say Cohen is left with less than $1 billion from outside investors, down from $6 billion at the start of the year.
“SAC has to be pretty nervous about the scope and potential impact of the withdrawals on both their existing and new business initiatives,” says Gross.