Kevin O'Connor is in place to ensure that history doesn't repeat itself at Point72 Asset Management. Handpicked by Steve Cohen in June last year to oversee compliance, legal and risk management, O'Connor needs to ensure that the sort of regulatory and legal issues that dogged SAC Capital Advisors don't happen again at Point72.
Cohen said that one of the biggest lessons he learned from SAC's legal issues after he pleaded guilty to insider trading charges in 2013, paid a $1.8bn fine and closed the fund to external investors was to “Trust, but verify.” This philosophy informs Point72's recruitment process.
Most recently, O’Connor was vice president of global ethics and compliance at United Technologies Corp., which he said was basically the role of chief compliance officer. Prior to UTC, he was a partner and the chairman of the white-collar practice group at the law firm Bracewell & Giuliani. O’Connor was appointed United States Attorney for Connecticut by President George W. Bush and served as associate attorney general of the U.S. from 2008 to 2009.
In short, O’Connor’s career spans government, law firms and the private sector, and he does not have the typical background of a family office or hedge fund general counsel or CCO. That is by design. O’Connor spoke to us about his career path, Point72’s recruitment process, lessons learned and advice for students and recent graduates.
How would you compare working at a law firm to working in government, in the corporate private sector and at a hedge fund/family office?
When I became a lawyer assumed I’d go to a law firm, hopefully work my way up to partner and stay my whole career there, and I would have been happy doing that, but other opportunities presented themselves that I decided to pursue. Working in public service, as a partner at two big law firms and general counsel here, I’ve liked every one of those jobs. I’ve liked the caliber and quality of the lawyers I’ve worked with in all of those jobs.
At the time I joined UTC, they had recently negotiated a settlement with the U.S. government in a criminal investigation, and they were determined not to repeat the past and do things a bit differently, so I came in as the de facto CCO.
I was given tremendous latitude to rebuild that organization, not just in the U.S. but around the world, including Asia, the Middle East and South America, where UTC has operations. I hired a tremendous number of lawyers to work in compliance in various locations worldwide. I managed a large team but we were relatively focused small number of issues, such as antitrust and U.S. government contract compliance.
Now I have a smaller team but there is a much broader scope of issues I face every day. Compliance tends to be the same issues that come up in different contexts, so you need to have bodies on the ground that can answer them in real time.
As general counsel [at Point72], it’s much more varied. We have around 25 people in the legal department, 12 of which are lawyers, plus some accountants on the tax side and paralegals.
What are your responsibilities as a managing director and the general counsel at Point72?
I’m responsible for the day-to-day management of the legal department, making sure that we have the appropriate lawyers handling the wide variety of issues that arise here and supervising outside counsel when we need to rely on them. In my first year on the job I spent a great deal of time on the personnel side to build this team, but now that it’s in place, I’m not so much building anymore as managing what we’ve built.
We have a wide range of legal issues and lawsuits, some will be with us for a while and some new ones that show up on a daily basis. Every day I’m providing advice, answering questions, trying to deal with current legal issues and anticipating future ones, protecting assets and thinking about issues such as cybercrime – are we in a position to protect ourselves? I have to ensure that we have the necessary protocols in place to deal with cyber-intrusion.
What do you look for when someone is applying to your division?
I want people who are smart, hard-working and easy to get along with – I’d put that at a premium. It’s the “who would you want to have a beer with?” test.
We deal with a lot of issues, sometimes short deadlines and unreasonable demands by our clients, so the job itself can be hard on any given day. I don’t want the job to be made any more difficult because people don’t get along with each other.
I look to hire lawyers who take the position seriously but don’t take themselves seriously, who have a sense of humor. Can they focus on the big picture and not get bogged down by day-to-day challenges? Smart, hardworking and easy to get along with – that’s the recipe for success.
How have candidates taken themselves out of the running for a position?
I think back to interviews that can best be described as a letdown – I see the resume, the work experience and references expecting to be wowed, but then I meet the person and they were underwhelming, so you have to ask yourself, “Is that the real person?” Someone seems perfect on paper, but during the interview they don’t seem very energetic. In those cases, I don’t want to disqualify them on the spot, but if this is their real personality, they don’t pass the beer test. There are many people who are smart and hardworking, but can’t interact or connect on an interpersonal level. There have been many cases when I want to hire someone on paper but couldn’t. On the other hand, sometimes I’ve met with people whose resume didn’t put them at the top of the list, but they nailed the interview and ended up getting hired.
For more senior roles, it can help to see them in a setting that’s outside the office. It’s important to be creative when you’re looking to hire a key role – for example, if it looks like you’ll be making them an offer, take them to a baseball game or a restaurant to see a side of them that you wouldn’t see sitting across from them at a conference table in a 30-minute meeting.
In the wake of the resolution of SAC Capital’s insider-trading changes, Steve Cohen has gone on the record saying “The biggest lesson I learned was, trust but verify.” How has that experience shaped your own mandate and that of your division?
My hiring in this position epitomizes that lesson for Steve. I’m not your typical hedge fund or family office general counsel if you look at my background. Steve was looking for someone with my experience because he did not want to go through the experience he went through in the past,
If I do the job the way Steve wants me to and I’m successful and eventually move on, hopefully not soon, my successor’s background won’t look like mine, with regulatory, government, compliance and legal experience, a high-level prosecutor and an enforcement background. The job will be more commercially oriented and my successor will know about what an investment firm needs to be successful.
My job is to make sure firm is responding to investigations and lawsuits appropriately – as we sit here today most of them have been resolved, but don’t lose the urgency of trust but verify. You can’t be complacent. Steve has made it clear that the problems [SAC Capital] ran into can’t happen again. It’s the right philosophy for any regulated business, even if they didn’t have the problems [SAC Capital] had.
What advice would you give to current law students or recent graduates who are debating which path to pursue and have an interest in joining a financial services firm?
I would say to any lawyer graduating from law school, no matter what they think they want to do, a piece of advice I give every single law student, you ought to try to clerk for a judge the year you graduate from law school or shortly thereafter. Clerking for a judge for a year or two, you learn more about being a lawyer than you do in three years of law school. If you do the job well, you develop a mentor for life. The key to success is having a mentor who’s been through all of the challenges and situations you’ll face so you can pick up the phone and ask them for guidance.
With mounting student debt, you want to get the best paying job right away, but if you clerk for one year, you’ll position yourself well for whatever you do in the legal industry.
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