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“Stevie Boy” Cohen: Too Big to Prosecute?

Posted by Larry Doyle on March 18, 2013 11:52 AM |

News released late Friday afternoon that the SEC has agreed to a settlement of $616 million with entities connected to SAC Capital is viewed as another indication that our financial police are playing hardball, right?

I mean $616 million is a lot of money, correct? Yes and no. Money is relative and playing hardball is in the eye of the beholder.

Did SAC and its founder Steven A. Cohen, aka “Stevie Boy” Cohen, just enter the realm of Goldman Sachs, JP Morgan, and the other heavyweights on Wall Street who have been defined as “too big to fail, to regulate, and to prosecute?” 

Or would a pursuit of Stevie-boy open a can of worms into the world of hedge funds that regulators and prosecutors would just as soon not undertake? All great questions. I personally believe the answers to these hardball questions can only be answered in the affirmative.

The total fine imposed of $616 million is actually broken down into two separate fines, one of $600 million and another of $16 million. That $600 million figure breaks down as follows: a return of $275 million in ill-gotten gains on the transactions involved, a fine of a like amount, and an interest penalty of $50 million.

The simple fact is the penalty portion ($275 million) could actually have been three times that figure. Hardball? Please!! If ever I heard of a powder-puff penalty, this $275 million falls under that heading. For an individual with an estimated net worth of upwards of $10 billion, does a penalty of less than 3% of net worth really make a difference?

Justice officials maintain that Cohen could remain a target of prosecution. If so, then why would the SEC have settled these charges, agreed to a fine, and given away a whole lot of leverage in the process?

I think most people in our nation would prefer Cohen and the large banks to keep the money paid in fines and have our justice officials and financial cops provide a healthy serving of the truth and let the justice system work in the process.

What is the value of the truth in our nation today? Priceless.

Why so? Regrettably because we see so little of it.

Larry Doyle

Isn’t  it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • matt

    I may be wrong (I don’t think so) but SAC is not a systemically important institution. Also, since a good portion of the AUM at SAC is Cohen’s own money, outside investors should not bear the brunt of a liquidation of the firm if found guilty of criminal activities.
    But we all know it’s not a matter of size since OpCo has been treated with kid gloves by New York State re: their ARS obligations. So it seems that whether you are TBTF or TS(mall)TF, financial institutions seem to be sacrosanct in today’s America.
    Sad.

  • Peter Scannell

    The thinking could be that you nibble away at the corners (more SAC inside trader indictments) before swallowing the whole enchilada.

    There got to be a lot leverage still on the table with SAC’s 20 years of 30% plus returns.

    Even Madoff couldn’t pull that off running a Ponzi scheme!

  • Mark J. Novitsky

    Are these “fines” tax deductible? Corporate “Cost of Doing Business” write-offs? Again…Double Jeopardy…penalizing the victims that “lost” money…then taxpayer/victims subsidy / tax break for criminal conduct.






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