Meet the new SAC Capital, or whatever it will be called
We knew it was coming, we just didn’t know when and in what form. SAC Capital Advisors will soon turn from one of the most successful hedge funds of all time to a shrunken-down family office that oversees only employee money, plus the $9 billion or so hidden in the pockets of founder Steven A. Cohen.
The official transformation is set for mid-March, according to Dealbook, with a name change being only the initial part of the corporate restructuring. It comes as no real shock that Cohen will remain as chief executive, but his day-to-day responsibilities will be mitigated by a new layer of management meant to act as a buffer between the boss and his admittedly thinner cadre of traders.
Cohen is currently facing an SEC suit charging him with failing to supervise his employees, eight of whom have now been charged with insider trading. Cohen so far has evaded criminal charges and, in recent months, has reportedly morphed from a head trader to more of a corporate leader.
Part of the rebranding has taken the form of layoffs. The firm said goodbye to dozens of traders within its now defunct office, many of whom have resurfaced at Moore Capital Management, and has cut back-office employees. Three trading units will be set up and run by Phillipp Villhauer, Michael Ferrucci and Ross Garon, long-time SAC staffers, according to Bloomberg. Neither of the three will report directly to Cohen.
One thing to watch moving forward is how the yet-to-be-named spawn of SAC will be treated, both by regulators and the Street itself. Five months ago, when the first official criminal indictment came down, banking counterparties that rely on SAC’s historic trading volume offered support for the reeling hedge fund, with Goldman Sachs President Gary Cohn calling the firm “a great counterparty,” despite the insider trading charges. The tide may have turned though, especially considering SAC no longer has the same bank roll. Within the last week, longtime broker Deutsche Bank decided it will no longer work with the SAC.
The other question to be answered is what new name will the firm take? Send your suggestions to US.Editor@dice.com and we’ll publish the best of the group. We’re expecting sarcasm.
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