It’s finally happened. After one of the longest-running investigations in recent memory, federal prosecutors on Thursday filed criminal insider trading charges against SAC Capital, putting the firm in danger of being shuttered. The indictment is chock-full of eyebrow-raising goodies.
The firm’s “institutional indifference” to following regulations led to “substantial, pervasive” insider trading that was “on a scale without precedent in the hedge fund industry,” the indictment read.
So what do they mean by “indifference?” Here are a few examples. SAC put particular emphasis on hiring portfolio managers with personal industry contacts. One candidate was mentioned in a positive write-up as “the guy who knows the quarters cold, has a share house in the Hamptons with the CFO of [a Fortune 100 industrial sector company], tight with management.”
In another instance, a newly-hired PM told SAC founder Steven Cohen in an instant message that he planned on shorting Nokia following some “recent research.” He apologized for being “cryptic” in his message, noting that SAC’s compliance head “was giving me Rules 101 yesterday – so I won’t be saying much[.] [T]oo scary.”
In 2008, Cohen was warned that Richard Lee, a PM whom he was preparing to hire, had a reputation for insider trading. Cohen hired him anyway. The tip was a good one – Lee pleaded guilty to insider trading earlier this year. There are plenty of other examples of gross indifference, well documented by DealBreaker.
For those who still remain at SAC, the future looks bleak. No major firm has survived a criminal indictment – it’s typically a deathblow. One of the problems facing SAC employees is the firm’s compensation structure. SAC reportedly defers a significant share of employee compensation to keep traders from walking away. Even if they want to leave, some may feel obliged to stick around and see what happens. Still, headhunters say plenty of SAC resumes are showing up on their desks.
As of writing this, SAC is still open for business, although two-thirds of its employees aren’t on their Bloomberg terminals.
Chase Hiring Consumer-Facing Bankers (eFinancialCareers)
Chase, J.P. Morgan’s consumer and commercial banking unit, launched a new job site this week with more than 4,000 openings. Wealth management and private client banking are two hot roles.
Two-Horse Race (WSJ)
The next chair of the Federal Reserve will likely be former White House Economic Adviser Larry Summers or fellow economist Janet Yellen, a Fed insider. Yellen appeared to be the clear frontrunner, but Summer, known to be close to President Obama’s inner circle, is gaining momentum.
Landmark Sentencing (Financial News)
For the first time in a long time, convicted Wall Streeters got a sentencing break from a New York judge. Three former UBS employees convicted of bilking municipalities out of millions in bond deals were sentenced to less than two years in prison. Prosecutors were asking for sentences as long as 21 years.
The Mediocre Generation (Business Insider)
“I look for evidence that a candidate is able to fend for themselves…have an assignment and go off and figure it out, as opposed to needing feedback or oversight every minute of the day.” That’s what Steve Ketchum, CEO of Sound Point Capital, looks for in young graduates. He believes that skillset is waning.
Mixed Bag (eFinancialCareers)
Mixed results for investment bankers at Credit Suisse. Profits doubled during the second quarter and cost cutting is nearly over. There is also some bad news: pay per head is down, again.
Growing Hedge Fund (Financial News)
U.S. hedge fund giant Millennium Management just keeps hiring. The latest steal is Stephen Keller, a managing director within UBS's investment bank. Millennium’s number of portfolio managers has risen from 120 to 150 over roughly the past two years.
MBA Recruiting Down (BBW)
Two-thirds of top-ranked business schools say on-campus recruiting was flat or had decreased in 2013.
Buzz Around the Office
Go Directly to an Empty Corner (MSN)
Hasbro has launched a new version of its classic Monopoly franchise with one glaring omission. They got rid of the jail, which we’ve heard was suffering from overcrowding.
List of the Day: Networking Tips
Networking is a skill like any other. To get better, try doing this.
- Listen more than you talk.
- Don’t just talk yourself up; form a connection.
- Expect tit for tat.
(Source: The Daily Muse)