SEC Closes Fairfax Investigation Into Hedge Funds: Sources

[Parsad]

According to Thomson Reuters, the SEC has closed the investigation against SAC and Kynikos.  Cheers!

 

http://money.msn.com/business-news/article.aspx?feed=OBR&data-ipsquote-timestamp=20111208&id=14602570

[Crip1]

No "cheers" going on here. >:(

 

 

-Crip

[Uccmal]

Well, it doesn't let monitor man, or Brogalboy, off the hook yet.

 

Cheers,

 

 

[Guest ValueCarl]

Hmm, Watsa, etal in their omnipotence must have expected this or they never broached upon studying the history of NY politics, including corrupt judges and complicit regulators when referencing Boss Tweed's Gang of Miscreants. Henry Clew's "FIFTY YEARS IN WALL STREET" might have been a good starting point.  If they hadn't done that, all they needed to do was consult with Dr. Byrne who understands this intimately.

 

This remains interesting, however.

 

<Reuters, along with Bloomberg News, are intervenors in the civil lawsuit, seeking access to millions of pages of documents and depositions that have been sealed in the case. Reuters, for instance, is opposing a motion to keep sealed portions of Cohen's lengthy deposition in the dispute.>

[Parsad]

Yes, I hope Reuters and Bloomberg get to see all of the documents.  Cheers!

[RichardGibbons]

so it looks like there was no wrongdoing and it was a gigantic waste of US taxpayer money?

 

Ending an investigation with no charges does not imply that there was no wrongdoing.

[RichardGibbons]

I'm not claiming that there were charges, just that there could still be wrongdoing.  There's a huge gulf between wrongdoing and prosecutable crimes.

 

 

 

[Parsad]

I'm not claiming that there were charges, just that there could still be wrongdoing.  There's a huge gulf between wrongdoing and prosecutable crimes.

 

Completely agree with that.  Often criminal charges are not enforced, but civil liability is completely intact.  Cheers!

[cwericb]

“where are the charges?”

 

Just because it is difficult to obtain enough evidence to take a case to court certainly does not indicate there was no wrongdoing. Would you believe that everyone that exceeds the speed limit gets a ticket?

[Alekbaylee]

By Matthew Goldstein

 

http://www.4-traders.com/FAIRFAX-FINAN-HLDG-1409991/news/FAIRFAX-FINAN-HLDG-Exclusive-Steve-Cohen-calls-insider-trading-rules-vague-13932474/

[Grenville]

Zero hedge has the 242 page transcript of the deposition in Fairfax's case on their website here:

 

http://www.zerohedge.com/news/presenting-steve-cohens-complete-unsealed-confidential-deposition-transcript

 

[Guest ValueCarl]

This continues to sound more and more like a man who does not believe in right or wrong, only the GREY MATTER which resides in between his EARS. For this reason, I would consider him an "enemy of the state," no different than the U.S. Govt. once considered Greek shipping tycoon and maverick, Ari Onassis, quoted as saying, "The Rules are; there are no Rules," in pointing his F U finger at the powerful U.S. Govt. enforcing their own views surrounding "The Rule of Law."

 

If there is a difference between Ari Onassis that makes him better; however, it would reside in his yearning to pursue profits according to the creation of businesses within a capitalistic system, as opposed to a "hedge fund manager" like Stevie Cohen of SAC who is intent on destroying businesses by means which any weak "definitions" according to him, should be tweaked and tightened up to stand for something in a New York minute!

 

Where's the SEC on this? Oh, that's right, they seem to more often than not, stand on the side of "stock operators" like Stevie Cohen. 

 

 

 

<In the deposition, Cohen acknowledges that in the aftermath of Galleon Group founder Raj Rajaratnam's arrest on insider trading charges in October 2009, his public relations firm suggested he begin reaching out to some reporters to burnish his image and "dispel" rumors of improper trading.

 

In particular, Cohen talked about a December 2009 story in The New York Times on SAC Capital and a subsequent June 2010 profile of Cohen and his wife Alexandra in Vanity Fair.

 

"There are rumors and what we wanted to do was dispel any notion of that," he said.

 

When asked by a Fairfax lawyer what rumors he was referring to, Cohen responded: "The rumors you just stated, that people weren't sure how we conducted our business."

 

In the questioning, Cohen comes off as controlled and well-prepared to engage in a sometimes testy back-and-forth with Fairfax's lawyer, Michael Bowe, over the dividing line between what constitutes permissible and improper trading.

 

Cohen says the rules on what constitutes inside information are "very vague" and sometimes it can depend on whether the information will move a stock, hurt another trader or can be obtained through another source.

 

For instance, Cohen said if he got a tip that an analyst is going to downgrade a stock and his fund opts to buy the stock, that is proper "because I'm on the other side of the trade."

 

Cohen said what is "material" in analyzing whether or not it is inside information often depends on the circumstances.

 

"You know, I mean, I can argue that someone else could think that a - being short in front of a sell recommendation is a non-event because it's not going to move the stock, and somebody else would think, you know, that's trading on material nonpublic information regardless if it moves the stock or not," said Cohen. "These are judgment calls."

 

At one point, Cohen shows some of his frustration with all the questions from Fairfax's lawyers about what constitutes inside information.

 

"We're having this conversation for about three hours about what's material and whatnot," says Cohen. "It's pretty clear that you and I have different views on it."

 

In the deposition, Cohen also takes issue with the word "edge" to describe SAC Capital's trading advantage over his rivals. Cohen says he "hates" the word and doesn't like to use it to describe SAC Capital's work. Yet he acknowledges the hedge fund talks about having an "edge" in some of its marketing material.

 

The release of a redacted version of Cohen's deposition came after Reuters went to court to seek access to it and other documents produced in the lawsuit filed by Fairfax in a New Jersey state court.> 

[nwoodman]

Whatever you do, don't call him Stevie  ;D

 

http://business.financialpost.com/2011/12/14/lawyer-for-sacs-cohen-dont-call-him-stevey/

 

"Michael Bowe (Fairfax’s lawyer): Okay. So the compliance manual — you have the authority, Stevey Cohen, to ignore the compliance manual?

 

Martin B. Klotz (Cohen’s lawyer): Object to the form. And I particularly object to the obnoxious, deliberate use of “Stevey” in addressing Mr. Cohen.

 

Bowe: It wasn’t deliberate. It was a mistake.

 

Klotz: No it was intentional, Mr. Bowe. Knock it off.

 

Bowe: How do you know?

 

Klotz: Because I know.

 

Bowe: I know you’re trying to be a tough guy in front of your client, but why don’t you knock it off? I know you’re trying to be tough — defend your big client. I understand that. This was a mistake.

 

I’m sorry I used the word “Stevey” if I offended you.

 

Cohen: I’m not a big client.

 

Bowe: If I offended you, I apologize. I’ll (sic) the word Steven from now on.

 

Klotz: Why don’t you use the word Mr. Cohen?

 

Bowe: Steven Cohen.

 

Klotz: Why don’t you call him Mr. Cohen.

 

Bowe: I’ll tell you what, Marty, I’ll question this witness however I like.

 

Klotz: I just ask that you be professional.

 

Bowe: You know what’s not professional is when you accuse someone of doing something intentionally when you have no idea whether they did or didn’t. Okay. That’s not professional. Mr. Cohen –

 

Can you read back my question? Withdrawn. I’ll rephrase it."

[Guest ValueCarl]

;) I always thought he was more like a Wonder to the investment world, you know, like Stevie Wonder is to the music world.

 

I don't know, but Stevie Cohen is appearing superstitious, if you ask me.  ;D 

 

 

[Parsad]

I can't believe the two lawyers argued about that...paid over $1,000 hour and they both acted like children.  Cheers!

[JSArbitrage]

That kind of stuff is very common in depositions.  Depositions are purposefully very long and very contentious.  It's an attempt to put the other guy "on tilt" (to use a poker term.)  There is a really funny one with Joe Jamail (famous Texas trial lawyer) on youtube where a bunch of 60-70 year old men almost break out into a fist fight during a deposition. 

 

Depositions are circuses.  There is a big push to reform depositions using principles from other fields in ADR (alternative dispute resolution) but trial lawyers still enjoy the circus aspect of it.

[Ben Graham]

That kind of stuff is very common in depositions.  Depositions are purposefully very long and very contentious.  It's an attempt to put the other guy "on tilt" (to use a poker term.)  There is a really funny one with Joe Jamail (famous Texas trial lawyer) on youtube where a bunch of 60-70 year old men almost break out into a fist fight during a deposition. 

 

Depositions are circuses.  There is a big push to reform depositions using principles from other fields in ADR (alternative dispute resolution) but trial lawyers still enjoy the circus aspect of it.

 

Here is the YouTube link - Joe Jamail has an old fashioned Texas Style Deposition.

 

Old Lawyer Fight:

 

 

                                                            * * * *

 

                                            SAC case is very disappointing.