For nearly a decade, SAC Capital Advisors has been on the radar of the federal government for alleged systemic insider trading. On Monday, United States Attorney Preet Bahara announced a partial conclusion to the firm's legal troubles after the company agreed to pay $1.2 billion dollars to settle its criminal liability. The huge settlement comes in the wake of the $600 million penalty SAC paid to the Securities and Exchange Commission this past summer.
So, where does Steven Cohen, founder and sole owner of SAC Capital -- a man still worth approximately $8 billion dollars -- go from here? After the settlement was announced, SAC sent a letter to their employees notifying them that they will continue to be run as a family office. I hope he reconsiders.
Outwardly, that sounds to me like the very same organization in which some employees were involved in criminal activity, but with fewer employees and less capital. Sure, there will be a court-mandated monitor to oversee operations, but many big companies have on-site IRS auditors and they still are blatantly defrauding taxpayers.
I have met Mr. Cohen on several occasions, and I was very impressed by something he once told me. We were attending bachelor parties in Las Vegas and we ended up at the same blackjack table. Just the two of us...a billionaire and me.
I was over-extended because of my pathological gambling problem. Steve Cohen said to me, "It doesn't make a lot of sense. I'm a billionaire, you are not, and yet you're playing $10,000 a hand and I'm playing $25."
He correctly foreshadowed my plight, and I wish I had paused long enough from the rush I felt from rapid-fire blackjack to soak in what he was really saying.
Those who follow the SAC saga will say things like, "How can you spend billions of dollars?", or "How much art can someone buy?" They will yell, "Greed." Personally, I do not believe people should judge how others live if they earned their money honestly. But these sentiments should raise a much deeper question for Mr. Cohen. "Where do I go from here?"
There is a lot of irony (more then I will share today) to my connection with SAC Capital. Nonetheless, I feel that my life's challenges have afforded me insight enough to offer the kind of advice I should have heeded from Mr. Cohen years ago.
Mr. Cohen, you are 57 years old. By your supporters accounts (notwithstanding the U.S. Government, SEC, and FBI) and my own experience, you are a very driven, bright, nice, and relatively humble man. In addition, you have shown a philanthropic tendency with your support of The Robin Hood Foundation, medical grants and other charities on behalf of the foundation that carries your name. However, your obsession with trading, the one that put you on top of Wall Street and got you into trouble, needs to find a different channel.
Here's how you do it. Take five of your reported $8 billion (you've earned it and are entitled to spend it any way you choose), recruit as many of your current and former traders as you can, and set up a new foundation, but one that's run as if it was your only source of income. You be the CEO and dedicate yourself, full-time, to running the charity with the same discipline with which you have run SAC for two decades. Invest, build, and operate businesses in impoverished and low-income areas across the United States. You could build new hospitals, schools, community centers and movie theatres in those areas.
You could immediately convert your amazing space (it's impressive, I've been there) in Stamford, Connecticut into the headquarters for this non-profit. Set this up with the same zeal and passion that you used for SAC.
I would not be political. I would not allow any traders who made over $25 million working for you to take a salary. I would pressure them to perform just as you did during your profit-making days. I would keep reinvesting. With your resources and IQ, you can prove all who think you are a sociopath wrong, especially your nemesis in the federal government.
I'm sure that you are aware that some press, government officials and parasites on Wall Street all have their own agenda as to why they want you to stay in the game. Don't give in to them. Your second act can be so much more meaningful and rewarding than your first. It will be more gratifying than the praise you currently receive from the likes of Goldman Sachs President Gary Cohn for being a sugar daddy to Wall Street.
Mr. Cohen your life is bound to be a movie, books are already in the works, and the TV show Person of Interest has already mimicked your legal issues. Are you ready to write the ending? I hope so!