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Exclusive Frontline Video: Stevie Cohen Gets Grilled

Posted by Larry Doyle on November 6, 2013 6:17 PM |

The saga of Stevie-boy Cohen of SAC Capital and the billion dollar plus fine his firm has just been tagged with is the stuff that sells books, papers, movies, and more.

Yet Cohen himself is largely a recluse. The folks at Frontline just released the following brief videos of Stevie-boy undergoing serious questioning regarding insider trading allegations and more at his firm.

This is truly riveting.

In a never-before-published video, hedge fund titan Steven A. Cohen, whose firm this week agreed to plead guilty to securities fraud, describes federal securities laws as “vague,” and asks for an explanation of the basic Securities and Exchange Commission rule that prohibits insider trading.

Under questioning in a video deposition obtained exclusively by FRONTLINE, Cohen is asked whether he is familiar with Rule 10b5-1.

On Monday, SAC Capital, the firm that bears Cohen’s initials, agreed to pay $1.2 billion in fines and plead guilty to what prosecutors described as insider trading “on a scale without any known precedent in the history of hedge funds.”

Cohen, who was not charged personally by federal prosecutors, is facing charges in a separate S.E.C. investigation alleging he failed to supervise his employees and prevent misconduct under his watch.

In the video deposition, which was taken as part of a 2011 civil suit, Cohen describes his firm’s trading rules as “general guidelines” and says that he gives his traders latitude to use their judgment when making deals.

This excerpt begins with attorney Michael Bowe reading a portion of SAC Capital’s compliance manual to Cohen.

The video offers a rare glimpse of the secretive billionaire investor at the center of the biggest insider trading prosecution in U.S. history talking about the very issues that have put him and his firm under such intense scrutiny.

The two-day deposition got testy at times.  At one point, a combative Cohen insists that he takes the issue of insider trading “very seriously,” but then admits that he doesn’t remember if he’s read Rule 10b5-1. “I rely on my counsel,” he says.

Cohen is also asked by Bowe whether he would be comfortable trading on a tip from a reporter about an imminent negative news story. As you can see, he struggles with his answer.

The deposition was part of a civil lawsuit by Canadian insurer Fairfax Financial Holdings, which claimed that SAC Capital had conspired with other hedge funds to spread false information in an attempt to drive down Fairfax’s stock price.  A judge later dismissed the suit, but that decision is currently under appeal.

Major props to Frontline for capturing, collating, and disseminating this material.

What do people think of Cohen’s artful bobbing and weaving?

Larry Doyle

Please pre-order a copy of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, that will be published by Palgrave Macmillan on January 7, 2014.

For those reading this via a syndicated outlet or receiving it via e-mail or another delivery, please visit the blog to view these video clips and to comment on this piece of ‘sense on cents.’

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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.






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