Grubstakers - Episode 77: Steven A. Cohen's Insider Trading Empire

Episode Date: June 26, 2019

This week we're discussing billionaire hedge fund trader Steven A. Cohen in particular and the hedge fund industry in general. There are two types of hedge funds: those that fail to beat the market and those that trade on illegal inside information. Steve Cohen's hedge fund SAC Capital managed to produce 30% average returns per year over 20 years after fees. Guess which category he fell in to. Hear about his life, his legal tribulations, his day time talk show appearances, and about whether US financial markets even come close to the standards of being a place for free and fair exchange.

First they think you're crazy, then they fight you, and then all of a sudden you change the world. Berlusconi flatly denies that any mafia money helped him begin to start the dynasty. I have always had a thing for black people. I like black people. These stories are funnier than the jokes you can tell. I said, what the fuck is a brain scientist? I was like, that's not a real job. Tell me the truth. But anyway.

Okay. In three, two, one. And we're back on Grubstakers, the podcast about billionaires. I'm Sean P. McCarthy. In three, two, one. Show love. And we're back on Grubstakers, the podcast about billionaires. I'm Sean P. McCarthy. I'm joined by my friends. Steve Jeffries. Andy Palmer.

And Yogi is out this week, but we're actually today doing a spiritual sequel to the Michael Milken episode we did, which I'm proud of. If you haven't heard of it, you might want to check it out. But the Michael Milken episode, to give you the cliff notes. Basically, in the 1980s, Michael Milken is still a billionaire. He was running a junk bond empire, which was a giant Ponzi scheme, on top of a large insider trading ring. And he got prosecuted, did a couple years in jail. And I guess when I say a spiritual sequel,

would you believe that endemic insider trading on Wall Street did not go away after Michael Milken was arrested and charged? And that's why the story of Stephen A. Cohen is the story of like, I mean, by returns, literally the most successful hedge fund trader in history. And there's really no explanation for his success that does not involve a ton of illegal insider trading also if you're wondering how that michael milken episode uh ended he uh changed careers and uh became a geodesic dome the man has a very smooth head which he he uses for ramming potential competitors for mates. Yeah, or he shines it up. Yeah.

And not blinds them. Michael Milken is regularly followed around by camera crews guided by David Attenborough to observe his mating rituals. But, you know, so I read this book, Black Edge, by Sheila Kolhatker. And I think it is also the spiritual sequel to the book Den of Thieves, which is the book about Michael Milken. And Black Edge is about primarily Stephen A. Cohen. Stephen Cohen, according to Forbes, as of June 2019, is worth about $12.8 billion. Extremely wealthy person. But Black Edge also deals with the hedge fund industry in general and uh sheila cole cole hat car she actually quotes a trader in the book a stock trader and

he says uh she asks him if he knew of any any hedge fund that didn't traffic in illegal inside information and this trader responded quote no they would never survive and they make the analogy to like steroids and baseball or you know uh doping and cycling or whatever it is where it's like clearly the big time hedge funds are doing trading and inside illegal information so if you want to keep up with them you you have to do it as well. And it is just something at the heart of our financial system where if you are trying to day trade stocks or whatever the case may be, you are walking into a rigged casino. And there's very little attempt to, I guess in the case of Stephen Cohen,

we have someone who got caught and then he almost got punished. The main difference is that counting cards is legal. The thing is, like, when we talk about, you know, these insider traders or just people on Wall Street in general, I think before we get to the biography of Stephen Cohen, one thing I do want to emphasize is, you know, these people are not really that much, if at all, smarter than you or

me or anybody on the street. It's just, if you look at the story of Steve Cohen or Raj Rajaratnam was another former billionaire who got convicted on insider trading. He actually got caught because he was very sloppy on the wiretaps, whereas Stephen Cohen was much more careful about that. Can't sleep on the wiretaps. Yeah. It's just, don't be explicit on the phone when you're insider trading is the main lesson of Stephen Cohen's life. But the point I was making was. Also, if you're the boss, don't let anyone refer to you as the boss. Have a fake boss.

Walk around in a robe. Pee in public. Make everyone think you're crazy the vinnie the chin gigante rule yeah of uh insider trading yeah is always act like a fucking dementia patient yeah well you're uh shorting alzheimer's drug test results um so the the point i was making here is essentially these people are not really that much smarter if at all in many cases they're quite a bit dumber than the average person you'll meet off the street. It's just the simple fact of the matter is Raj Rajaratnam and Steve Cohen

went to Wharton Business School. At Wharton Business School, they made a bunch of contacts who just happened to like, because it is the premier business school in the country, those contacts just happened to go on to all of the major publicly traded companies. Oh, did anyone famous go there?

Yeah. These people, they run in such narrow social circles. They're pretty much bred from the time of middle school to do what they do. And so they have very narrow social circles that expand to a very extensive one later, but with relatively similar backgrounds. And they just do quasi to actual insider trading

in order to beat index funds. Exactly. And I think we've made this argument on the show before, which is the only way you're actually going to beat, they say, 8% over the long run average return of just sticking your money in an S&P 500 index fund. The only way you're going to beat that 8% consistently is to insider trade, to no non-public information.

Or invest in gold. Yes. Or check out our new sponsor, WeBuyGold.com. But I guess the point wascom We did some demographic research and it turns out everyone who listens to this is over 80 and stupid. The only way to beat the market is by investing in reverse mortgages

once you retire. Look, we all know the only way to beat the market is insider trade or buy our new initial coin offering, the Grubstakers coin. Yes, we stole the white paper from a Chinese company. Yes, it is tied to Goatsy coin. We accept Libra. Look, we set up a Delaware shell company, which is in turn owned by a Caymans Island shell company. And if you just send your credit card information

or a money order to this LLC black box, you will receive the Grubstakers coin. In fact, if you just send us, like, your routing number and bank account. But I guess my point was, you know, Raj Rajaratnam, Steve Cohen, they both went to Wharton School of Business. And, you know, this premier business school, it's kind of similar to people who go to Harvard Business or whatever, Ivy Business Schools, is that they go on to work in these public companies. And the people you'll meet in college

will happen to have a lot of inside proprietary information so it is what happened with steve cohen and raj rajaratnam was they were able to use these networks to set up you know five or seven or however many people where it's like okay i have a tip on this company i'll share it with the group and in exchange they have a tip on this company they'll share it with the group so it's like it's you don't get rich also jeffrey effstein saw me having sex with teenagers my point is you don't get rich trading stocks because you're smarter than the average person and that's you know what's really kind of beaten into our heads with you know whatever capitalist propaganda is that the rich are so much smarter than the rest of us and it's like when it comes

to actually beating the stock market, it's just entirely about what network you end up in. Because there's no way to consistently do it without inside information. You're really just beating off the stock market. But I guess to talk about one example of this is from the book Black Edge. She actually has uh emails from five traders uh several a couple of them worked for sac capital which was steve cohen's company and uh she has an email that they sent to the others setting up their illegal insider trading

ring uh so this this trader sends an email to uh five other people uh introducing them to each other to set up this ring. And I'm just going to read directly from it. He says, quote, rule number one about email list. There is no email list. And then in parentheses, he says, fight club reference. Just in case you did not get that reference, that this man so much smarter than you,

which is why he makes a quarter of a million or half a million a year. These are your betters. Just accept it. This is what peak performance looks like in an email form. It's so funny how the portrayal of the hot shot

trader in the media is someone who's really cool and doesn't give a shit. And then it's a guy who says in his email, fight club reference. That guy is just relying on Chinese interns to do all of his modeling and stuff. Yeah. Handy. Coffee is for closers. Glenn Gary, Glenn Ross reference.

Luke, I am your father. Empire Strikes Back reference. I was wondering which movie that was. I thought it was Attack of the Clones. Is he also he seems like a guy that would sign his name at the end of like forum posts uh yeah he had he definitely had a signature but it is just like my point is like you know a lot of these people are fucking sheltered rich kids who just go to these rich kid networks and they get rich kid connections who go on to like have uh positions in public companies

that are like at the top of the stock market where they get first look at all this very market moving information so you know if there's one thing this episode does i hope it kind of dispels your idea that these finance hot shots are really that much smarter than you. They're just benefiting from the massive system of illegal insider trading we've set up where only very occasionally does the government even attempt to do something about this. And if you're listening to the show, I'm sure you have bought into the idea that traders are smarter than you. But so two things before we get to the steve cohen bio here uh there is something interesting that black edge makes the point of which is insider trading uh from the michael milken episode

that throughout the 1980s primarily this was based around mergers and acquisitions there was like all these corporate raiders and junk bonds and stuff throughout the 80s and all these corporate yeah takeovers essentially so if you buy a stock right before there's an announcement of a giant takeover obviously you'll make a lot of money so insider trading was primarily based around mergers and acquisitions so they're just leeching off hard-working corporate raiders exactly that's sad yeah they were uh the fucking feeder fish on the side of carl iconhn. But the point was today, it's more based around the quarterlies.

And if you happen to amble over to the Reddit forum WallStreetBets, you can find a nice little infographic showing which corporations will be reporting their quarterly earnings this week. So quarterly earnings are now the primary, let's say battleground for insider trading because if you happen to know what the quarterly earnings will be before they

are publicly announced it's you know shooting fish in a barrel i mean you do have to estimate what everyone else thinks they will be so it's not that straightforward but if you know it's not that straightforward. But if you know, it's like very easy to make money, essentially. That's like the quarterly reports are going to be public, obviously. Right. But they're sort of, they're the raw material, I guess. Like all of the information that goes into writing those things. Yes. That's the raw material that a lot of insider traders will be using. So they'll be using profitability of certain products or lines of business within a company that's private until it's reported, aggregated up and incorporated into one of these reports.

So how would an inside trader get that kind of information? You had me watch the pilot to billions and besides um knowing that paul giamatti gets peed on in that show it's in the first two minutes of the pilot i'm not spoiling anything um like there's a guy who i do like how they were like how do we make this show about stock trading interesting let's get giamatti pissed on within two minutes and the best part about them casting what about three minutes no it's got to be two minutes two minutes they're gonna turn it off if they do not see urine splashing on giamatti's face immediately and and it And it's funny that they cast Giamatti so perfectly because as soon as you see

the first shot, which is him on the ground with his belt in his mouth, you're like, oh yeah, he's a sub and he's going to get burned and peed on. You're not going to see Paul Giamatti doming someone unless it's a slapstick. Well, so yeah, two points there like how do you so oh yeah so so in the show in the pilot uh one thing they show is a guy uh bribing uh a warehouse

dude to show him that you know there are all these units of of uh wheels like car wheels that aren't being sold uh and they're just sitting in the warehouse and so that's how he gets the inside information that they're over producing yeah so like and we'll come back to billions in just one second here but um there's a lot of different ways of getting the inside information but of course you know we mentioned you know you'll have all these classmates if you went to wharton or harvard business or whatever the case may be you'll have all these classmates who happen to like know things or know a guy who knows a guy you'll have that network going you'll have you know you can bribe people at public companies we'll go through expert networks where you can actually pay a third party to set you up with employees at public companies and then you actually have uh which is also portrayed in billions um

essentially like just taking people from companies out to party. Like if you watch the other thing, in addition to Black Edge, there's the frontline documentary to catch a traitor, which talks about Steve Cohen. And they interview this like former wall street trader who worked at like the galleon group. And they show this photo of him in Manhattan, like talking about how he would get information. And you can see both of his nostrils are like clearly inflated.

Like he was definitely in the bathroom doing coke somewhere uh they show this photo of him and it's like yeah you just take you know people whether they be from other banks or hedge funds or public companies you take them out on you know the town in manhattan you party you go wherever you take them out to clubs restaurants whatever they happen to be into it's actually public because anyone could try to do that. Yes. Only those who put in the grind of fucking taking Apple execs to scores in New Jersey. But so, you know, and so like SAC, which is Steve Cohen's firm,

they actually like had like a regular budget of taking out Apple and Texas Instrument executives to restaurants, bars, bars clubs wherever they wanted to go you know so it's like you will have people at that company who that's their fucking job get information that way by showing people a good time but you mean there's perks to being an apple executive and yeah so like it's not uh far from the image of there being a bunch of spreadsheet jockeys who are doing risk analysis and they're like, that's it. That's how we know they're profitable. And then they put in the buy order. And then that's what happens.

No, it's just like a bunch of stupid shit like this. Really go out to dinner. And then one of them just divulges that, oh, actually, we're going to have a good quarterly report. Or a bad one. Here's the thing. I think executives at Apple and Texas Instruments are underpaid, and we have to pay them more

to ensure that they're not going to be corrupted like this. I was just imagining the trader from the email in question losing a bunch of money on a trade and sending out an email like, I could have saved more. Schindler's List reference. But I did want to, right before we get into the bio of Stephen A. Cohen, I wanted to talk about Billions, the TV show, which, like, I've watched all four seasons of. It's not actually a good show i mean like there's a lot wrong with it but it's like kind of addictive you know it's like what do you want there's um there's a healthy amount of giamatti yes there's paul giamatti and it is

one of the the best parts of it um and he in at least in the pilot, he turns the Giamatti all the way up. But, you know, so in the show Billions, it's partly based on Steve Cohen's hedge fund, SAC Capital. You know, Axe Capital is based on that. And it's a composite of different hedge fund managers. But, you know, it has Paul Giamatti as the U.S. attorney trying to, like, take down Damian Lewis, who's, like, the Steve Cohen figure in the show. I thought his name was Axelrod.

Yeah, well, that's the actor. Oh, okay. But yeah, Bobby Axelrod is Steve Cohen. He's fallen so far from being a band of brothers. But I did want to just make one point of inaccuracy that I found from this book, Black Edge. In the show Billions, if you happen to be a Fan or a viewer of it

You might know Wendy Rhodes is Paul Giamatti's wife and she happens to work as a therapist at this Axe Capital firm You know and she like teaches she's kind of like a deus ex machina character where she like teaches all the traders how to unlock their inner alpha and be not afraid to like Do the insider trading they need to do. She learned at psychiatrist school how to unlock people's absolute worst impulses. Well, there is actually a real basis for her character at SAC Capital, but the actual story is much funnier and more interesting. So according to the book Black Edge, there was Ari Kiev,

was a therapist at SAC Capital, but he was actually widely hated by all the traders, and they viewed him as both a medical fraud and quack and spy for Steve Cohen. Because Steve Cohen would, of course, have him do therapy sessions with any employees he was like worried were like plotting against him or like hiding stuff from him and you know everyone at the firm suspected they were like reporting back to him and um interestingly enough yeah

Steve Cohen would do that I would never trust an at-work therapist steve cohen would do therapy sessions with this guy and cohen's first wife thought he was using therapy sessions with steve cohen to get stock tips which i respect a lot more than like just being some fucking shitty self-actualization wall street asshole therapist and he also uh ari kiev he wrote several books marketing his work with SAC Capital so it was kind of like hey I was the therapist for the best hedge fund so of course now I can parlay this into an author uh deal and you can look him up on Amazon they have titles like the quote the mental strategies of top traders unquote so it's just kind of funny where it's like you know uh they took the idea of like this complete fraud and hack and and made her into a pivotal character in the

show who like you know we all just need to like sit down with like a therapist who will teach us how to overcome our fears before violating securities laws There's also an interesting side note on Billions where the main character, or the main traitor character is loosely based on an actual guy who was the CEO of Cantor Fitzgerald. And some people might know the stories that most of Cantor Fitzgerald was wiped out on 9-11. But he survived.

They were in the planes. they were the hijackers it was really aggressive short play against american airlines i it's funny because i mentioned this and we put up the uh regav episode and i think i might have mentioned that and i might have talked about it in that one uh from our old podcast but i interviewed a cantor fitzgerald and going in i was like do not bring up 9-11 but they're huge douchebags um but the the ceo of cantor fitzgerald um he he survived because he was picking up his son from kindergarten so when it came time to have his son's bar mitzvah he rented that's what he told the investigators yeah he rented well and he he really drove it home by renting out a whole wing of the met with the temple of dendor and let kids uh for and so they had to close it for like three days to prepare this bar mitzvah and um then they had kids uh one of the things they let kids do was drive go-karts around

the American colonial wing. At first I thought, um, the, they were driving, uh, the carts around the temple at Dindor and I was offended, but then when they were like American colonial, I'm like, okay, fine. What are they going to do? Like break a table that a slave owner used to own? Like who gives a shit? Yeah. Well, that's interesting.

But, um, I guess if, uh, we can start with kind of the biography of Stephen A. Cohen. As we mentioned, $12.8 billion. And we mentioned over like 20 years he was averaging 30% annual returns after fees, which is unheard of. And again, I would argue impossible without insider trading. And so how do you get to be that person? Well, Steve Cohen, he was born in 1956. He grows up in Great Neck, New York, Long Island, third of eight children.

And this is an affluent suburb is the way it's described in Black Edge. And his maternal grandparents were quite wealthy. Steve Cohen is like the impression I got of him was essentially um the lower end of the wealthy spectrum is how he grew up um you know his like uh his maternal grandparents drove a cadillac they lived in manhattan off of an investment portfolio of inherited money you know so he's he's self-made according to. Yes, he's like a seven, I think. Seven or an eight.

Yeah. But yeah, so his grandparents... But an L.A. four. Yes. His grandparents lived off an investment portfolio of inherited money, but his father would take the L.I.R.R. into work into Manhattan every day.

His father ran a Minerva Fashions, which was a dressmaker in the garment district. So he had his own company. His dad did that, according to Black Edge, made $20 dresses for chains like Macy's and JCPenney. His mother was a piano teacher. Humble origins and all that, you know, but you know, he, as Steve Cohen talks about like seeing his father go to work and comparing that to his grandparents who just live off his, their investment portfolio and being like, I don't want that kind of life where I actually have to do labor basically. Wait. So his grandparents lived off their investment portfolio. So his father was downwardly mobile. Yeah. Sort of. I mean, he like had his own factory.

I think he was pretty rich. Just as far as like the community of Great Neck, they were on the lower end of the rich people who lived in Great Neck. That's pretty rich, too. Yeah. But so Steve Cohen actually starts playing poker in high school. He talks about this a lot as like what got him into trading. You know, I mean, it is all a fucking casino. But, you know, like according to the book, by like the 10th grade, they're like they'll win or lose a thousand dollars in a night. So he's like playing pretty high stakes poker by a young age.

And he gets admitted to Wharton, you know, University of Pennsylvania School of Business, Wharton. His parents pay for it. And at Wharton, he joins this historical Jewish fraternity called Zeta Beta Tau, ZBT. And according to the book, the frat's nickname is Zillions Billions Trillions. And it's the wealthier of the Jewish fraternities on campus. Oh, really? Yeah. And he spends most of his nights there playing poker in the living room. And what I did find interesting about ZBT. It's really about hard work, you know.

What I did find interesting about ZBT, Zeta Beta Tau, is the original article for this is down. But just from on Wikipedia, Steve Cohen's exact chapter of ZBT got into a bit of trouble for some let's say tasteless racial stuff about 10 years after he graduated. So Steve Cohen graduates Wharton with an economics degree in 1978. 1988. So you're saying a blackface Christmas party. Yes, literally that. I mean, it's a Jewish frat, so Hanukkah, but, you know. Well, I mean, it was also culturally insensitive to do a Christmas party.

They mocked the deicide. According to just Wikipedia, in February 1988, the Judicial Inquiry Office of the University of Pennsylvania charged the Zeta Beta Tau fraternity with violating seven Pennsylvania statutes and a University of Pennsylvania guidelines, including sexual and racial harassment during a fraternity rush event on October 1, 1987. The fraternity was accused of hiring two African-American women to perform before an audience of 100 to 200 men during the rush events. While the two women were undressing, the crowd yelled, where did you get them? Guess the word and other racist remarks. So, you know, all those photos of politicians and blackface and stuff from the 80s that are coming out uh steve cohen was was in this fraternity about 10 years before they reached that uh racially sensitive time

of the 80s so you know i mean i have no idea what he got up to there it's just kind of and this is racism by pennsylvania standards yes interestingly enough the university of wisconsin madison chapter in 88 also held a mock slave auction where they had students dress in wigs and blackface and they were sold for their services to other students and abused with racial slurs and the like. So this is the zillions, billions, trillions fraternity on the cutting edge of PC culture. But, you know, hey, who knows what kind of stuff Steve Cohen got up to in college. Apparently, according to the book, he spent most of his time playing poker and taking money from other rich students. But he graduates Wharton with this economics degree in 1978. And the same year, he starts working at Gruntel & Co., a midsize Wall Street brokerage.

And he kind of moves. Interestingly enough, according to the book, his childhood friend was running the options department. They were doing, like, options arbitrage, which is, like, now not really possible based on the technology. But the idea is you would, like, find difference in option prices between new york and chicago stock exchange and you would make money by just getting this little 25 cent or 50 cent or a dollar profit on each sure price difference yeah and you know technology has since rendered that irrelevant but that's what they were doing to start out um so they probably like had access to some of the technology that now makes it irrelevant or just a guy in chicago on the phone just like more that i think um but it is interesting where like uh uh gruntel is like throughout the time that he's at gruntel it's like there was a fortune magazine article in 2003 called quote the shabby

side of the street about gruntel which describes it as like an open criminal organization uh just like uh basically they talked about how like throughout the 80s and 90s brokers were charged with insider trading and securities fraud they paid like 750k to settle a sex harassment crime arbitrage yeah they settled a sex harassment lawsuit um and just from this fortune article uh the firm's uh nepotistic roots flowered under uh howard silverman who ran gruntel with an iron fist from 74 to 95 that's the whole time steve cohen was there uh until silverman's ouster his two sons operated a company that cleared all the trading for gruntel on the floor of the new york stock exchange while a son of edward bow silverman's deputy handled all the amex floor business and the floor of the New York Stock Exchange, while a son of Edward Bow, Silverman's deputy,

handled all the Amex floor business. And the point of this is, like, every trade that Gruntle makes, you know, whoever executes it collects a commission on it. So the point is his sons are running the company that collects all of these commissions. So it's, like, kind of a clear conflict of interest there. And the point is... Did they go down because some of the employees got kind of a clear conflict of interest there. And the point is. Did they go down because some of the employees got kind of disgruntled?

The point was essentially like where, you know, the top management is so clearly like playing for their own book. They're not really going to watch what you're doing. So this kind of culture of insider trading and also just straight up em doing so this kind of uh uh culture of insider trading and also just straight up embezzlement kind of flourishes like one other quote from this fortune article three top managers in the back office known as the cage were found to have been siphoning money to personal accounts for a decade uh bao himself the deputy went to prison for diverting dividends from gruntel's, quote, dead accounts. By law, they were supposed to go to the state to falsely boost the firm's net profits.

All told, $14 million over 10 years was embezzled. And these are the dormant accounts of dead customers that top management was raiding and embezzling $14 million from. And, you know, so it's just like that kind of corporate environment that Steve Cohen makes his bones in and grows up in, you know, Gruntle and Co. And so a childhood friend of his was running the options division. He's working at... Matthew McConaughey also, like, you know, took him out to lunch. Did coke and started pounding on his chest.

What if that scene in Wolf of Wall Street was like, they just had the cameras on and Matthew McConaughey... Oh, it's a Wolf of Wall Street reference? Yeah, Wolf of Wall Street reference. Good one. And then just like in between takes, like Matthew McConaughey just started doing coke and pounding on his chest while humming. And we'll keep that in. We'll say it was prop coke. Stealing billions of dollars from a Malaysian sovereign wealth fund.

Wolf of Wall Street reference. But yeah, so, you know, and so Gruntle at this time starts doing proprietary trading, you know, trading their own money, trading their own book. And so Stephen A. Cohen is working at Gruntle's prop trading desk. He works under his childhood friend who sets up this deal where the team keeps like 50 percent of the profits they make. And throughout the 1980s, Steve Cohen incidentally is married in 1979. But throughout the 1980s, he's riding this mergers and acquisitions wave we mentioned. You know, all these hostile takeovers, all this insider trading going on where people keep getting tipped off right before mergers and acquisitions happen. So he's making a lot of money riding, you know, these corporate raiders and junk bonds and stuff to the point where, like, by the early 80s, he's making about $5 to $10 million a year.

According to Black Edge, he is a, quote, disengaged father who would come home from work in a, quote, irritable state and argue with his wife about money and how people are ripping him off. Another thing you'll see with Steve Cohen, he's a billionaire who's unsurprisingly extremely cheap and constantly thinks people are ripping him off or whatever the case may be uh his ex-wife said his children were afraid of him he had two children with his first wife um but basically the point is you know he's riding this m&a uh mergers and acquisitions wave to the point where by the 1980 by 1985 steve cohen negotiates a deal for his own group within the firm where basically he gets to hire and fire traders who work under him. He gets to decide their compensation structure and he gets to keep 60 percent of their profits. So it's like, you know, they get like 30 percent of their profits, whereas he gets, you know, 60 percent of the group's profits. So like half of all the money they make goes directly back to him so it's you know it is

pretty nice the way you know like really at the heart of finance capitalism we can best replicate the exploitative structures of capitalism um but uh i guess what i wanted to emphasize was by 1985 at the latest he is absolutely balls deep in insider trading and he would stay that way for his entire life and career um and we know this from the book black edge uh by 1985 the sec has an investigation into him basically in december 1985 steve cohen calls his brother donald and tells him to buy rca stock which was then the parent company of NBC. Just so happens six days later, General Electric announces a takeover. Cohen makes about $20 million profit on this trade.

And his ex... You can buy a lot of VCRs with that. His first wife said that he later told her a former Wharton classmate working for Drexel under Michael Milken actually gave him this tip. So interestingly enough, he actually made about $20 million off somebody involved in the Michael Milken insider trading ring. So, you know.

I just like that they're looking out for their friends. Yeah. And so there's this SEC investigation. Apparently they also... That's not my wife. There's this SEC investigation where they subpoena him, and he takes the... Flying airplanes into the World Trade Center? That's okay.

Thank you, Tom Friedman. That's the video you watch when you join Cantor Fitzgerald. So the SEC looks into Stephen A. Cohen's uh trading they also look at suspicious transactions on union carbide general foods warner communications uh the sec says according to the book quote a group of people connected to cohen had acquired shares of all three stocks as well as rca right before public announcements had driven the prices higher unquote unquote. So the SEC subpoenas him. He comes in for a deposition. He pleads the Fifth Amendment.

And then the investigation just doesn't really go anywhere. They don't have enough evidence. But it is just something where it's like by 1985 at the latest, he was balls deep in this strategy. You mean he wasn't stuck in a situation like, say, someone who has a public attorney and is wrongfully arrested for something they didn't do and they can't afford to go to trial and so they have to plead guilty? No, Andy. He's innocent until proven guilty. to read all of the best defenses of the rights of the accused against prosecutors, just open up a

Forbes or a Fortune article about anyone accused of insider trading, because you will hear really everything you should be hearing in every other court case. Oh, I did want to mention, we were talking about the inaccuracies in billions, i just wanted to point out uh the fact that a preet barara gets pissed on is totally accurate he's into bdsm i imagine that's how some insider trading goes down though uh oh yeah i was pissing on this guy who said that uh the quarterly earnings are just off my safe word is uh nvidia's orders for this quarter on this guy who said that the quarterly earnings are just off? My safe word is NVIDIA's orders for this quarter. But so what happens is, you know, 85,

he's got his own group at Gruntle, Stephen Cohen does, and 88, he gets divorced from his first wife. He goes through a year-and-a-half-long legal battle. At this time, he claims a net worth of $16.9 million. Don't know how accurate that is. Claims that in court filings. He gives his first wife the apartment. He claims that's worth $2.8 million. He gives her a million in cash.

He gives her $4,000 a month for the two kids they have. But just an interesting little Steve Cohen anecdote from this time is the day after he signs the final spousal agreement with his first wife, he shows up to work and he turns to his traders and said from the book, quote, I just got ripped off by my wife. I'm going to make it all back by cutting your payouts. And he apparently made over $4 million that year and he gave his wife less than that.

And so apparently, like I said, he was taking 60% of the group's profits. He cuts all their payments by 5%. So, you know, nice guy. But so, so you know he's working for gruntle until 1992 he comes up with the idea of striking off on his own you know gruntle's kind of there's a lot of bureaucracy it's obviously institutionally corrupt and he's got the idea like he knows how to do this shit he can do it better on his own uh so in 1992 uh he's founds sac capital okay cut the joke where earlier i make the disgruntled joke. Now pause. I guess you could say he was pretty disgruntled.

Shut up, Andy. The point is, he starts SAC in 1992. He has about $23 million in capital, about $10 million of that's his own. And that's the thing, like his wife, his first wife would later sue him for hiding assets from her during the divorce so unsurprisingly i think this 16.9 million number might be a little low but regardless he's a multi-millionaire from just riding all these mergers and acquisitions stock market boom in the 80s and he strikes out on his own so you know 23 million capital about 10 million his own and the others comes

from like traders friends investors uh connections he's made uh nine employees to start and they're basically doing large-scale day trading and interestingly enough he hires early on a guy named kenny lesik who's a former gruntal stock trader who had like it was much more personal cohen's more of an introverted guy he had like a lot of direct relationships with people at Goldman Merrill Lynch eventually Kenny Lessig would be brought in and made a 20 percent general partner but Kenny Lessig's important because essentially Kenny Lessig starts getting the firm access and early looks at market moving institutional research papers like for example you know we mentioned these relations at Merrill Lynch if Merrill Lynch is going to put out a research paper on a stock that might have a buy or sell recommendation, Merrill Lynch will call the hedge fund first and be like, hey, before we put this out publicly, we're about to release this sell recommendation, you know.

So, of course, like it's shooting a fish in a barrel to make money if you get the first call like this. An idiot could make money off of this. So, a guy who says Fight club reference could make money off this so merrill lynch is just like hey uh uh just doing the courtesy insider trading call to let you know uh how you can break the law and make a lot of money apparently this shit is legal which blows my mind but uh so sort of like congressional insider trading yeah uh but so and also partly why he does this is an important shift that takes place in the industry is uh up until this time the big bank or the brokerages like goldman sachs merrill lynch uh lehman brothers they were their number one clients were these institutional fidelity, kind of major retirement account holders.

Those were like the number one first call clients. But the thing is those people... That's number one. Those people just kind of like hold their money dormant, you know? And so in the 90s, particularly the late 90s, hedge funds really become dominant on Wall Street. And hedge funds are doing an insane volume of transactions every day. Whereas like Fidelity is just kind of like very sedate in comparison.

So Fidelity might have a ton more money invested. But because they are not doing these, you know, thousands or even millions of transactions every day, they are not, you know the the book gives the example of at the time goldman sachs makes like a six cent commission i think this is 98 on each uh share they buy or sell for a client so if he's doing you know thousands of those every day whereas fidelity is just much more sedate well he's making goldman and whoever else a lot more money so of course he can leverage that and be like, Hey, I'm paying you all these commissions.

I want first call on all research reports, all analyst recommendations, all that shit. So that's how hedge funds kind of become the dominant players in the market and set up this massive, you know, even the part that's, that's legal is insane.

And you know, it just makes a joke out of the idea that we have a fair financial market, you know. But, you know, Kenny Lessig gets him all this and then he pushes him out in 1997. But I guess I did want to mention in 1992 Stephen A. Cohen gets married for the second time. And according to the New York Post, he appears on sort of a daytime Geraldo-style talk show called The Christina Show with his second wife. And the subject of the episode is like second wife's complaint whose husbands are still like messing around with their first wife.

And so it's very unfortunate. If a listener has this tape, the New York Post posted it, but then it got taken offline. If a listener has this tape, the New York Post posted it, but then it got taken offline. If a listener has this tape, please send it to me because I'd like to play some of it. But so basically, according to the New York Post, Cohen's second wife, Alex, told the studio audience, before we got engaged, we broke up and he was still sleeping with her.

And then this resulted in a lot of you know just that kind of like jerry jerry which like i don't know it's just kind of funny to imagine this like master of the universe squirming like some fucking white trash daytime talk show audience booing him for yeah he goes on like ricky lake i would i was a billionaire portfolio manager steve co and now we're gonna bring out the midget clan members uh but so you know uh the the point i'm only a little bit racist uh the point is like steve cohen is like uh notoriously like secretive quiet guy so people speculated like this show that his second wife had like complete control over him

where she could like push him to appear on this trashy daytime show in 1992 and uh you know and admit that uh early on while they were dating he was still sleeping with his ex-wife so maybe that was a sex game it was like their his his kink was humiliation maybe Maybe. He's in the fandom. Let's not kink shame him. It's true. I don't want to. Just because they're Ku Klux Klan members doesn't mean I should use the pejorative midget. What if that's how we get cancelled?

If you have this tape, let me know. It is just kind of interesting where the excuse he uses to push the partner Kenny Lessig who got him all these connections and really the firm quadrupled in growth in three years so I think Kenny Lessig like of course by having all these connections to Goldman Sachs and Merrill Lynch is like how you grew and then of course he pushes this guy out in October 1997 by accusing him of trying to instigate an affair with his wife and interestingly enough kenny lessick had lost 100 pounds and was recovering from a life threatening illness at the time so it's just like a completely absurd charge but stephen a cohen like being the vindictive guy he has also called around to basically every firm on wall street and said you cannot do business with us if you hire this this guy, I mean, maybe he lost a hundred pounds and got extra fuckable. Lost a hundred pounds from fucking too much.

The ultimate calorie burning workout. Um, but so I guess where, uh, where I had, I had a life threatening illness. It was, uh,

needs pussy-itis. But your wife, man, she is an angel. She cured me. Man, your wife pissed all over me. We made Preet Bharara watch. Is that why she ran out pre-barara uh started the case because he was watching sac traders have sex and they kept talking about illegal insider trading uh they just couldn't shut up about it um but so uh just to kind of like move on to you know the the high-flying

90s and the 2000s in particular is where hedge funds become the dominant players on wall street we've mentioned this volume of order flow uh nonsense but an interesting thing happens where you know 99 uh sac organizes their traders into specialties where they'll have like a health care group an energy group etc instead of just general purpose speculators and what's interesting is according to the book Black Edge, they start hiring traders partially based on personal connections they have to people working at various public companies. The example they give is like it's noted approvingly in a hiring file if a potential hire had a summer rental in the Hamptons

with an exec at an internet company. So like these kinds of personal connections are all like part of what will get you in the door. So it's like, it's very much institutionally based around insider trading, which it's like, how else are you going to, we didn't really cover this in our hiring episode.

Yeah. That we're recording next. Yes. Oops. Yeah. Check out. Yeah. One addition to the hiring

episode if you're looking for a job on Wall Street if you could just talk about how you like have a bunch of friends who like get the quarterly reports early at Google yeah what's my greatest weakness all the people I know who work at

Facebook and know the quarter three numbers before they're released publicly do you know anyone who work at Facebook and know the quarter three numbers before they're released publicly. Do you know anyone who works at Facebook? I have a Facebook. You're hired. No, it's not. God.

And we were talking about like how these people are not that much smarter than us. Steve Cohen's emails are just riddled with typos. The point where it's kind of weird. Like, so they have this this trader named cb lee who has like connections with asian tech manufacturers so he gets he flies out to asia his job is to like get the numbers on like what kind of chip deliveries major companies are

going to get before the public knows you know this kind of shit and so cb lee works for another trader who's like kind of hoarding that research so steve cohen sends him an email and so cb lee works for another trader who's like kind of hoarding that research so steve cohen sends him an email and says cb lee has to submit reports directly to me and this guy like complains and then steve cohen sends him an email that i'm just going to quote on uh that says then quit t-h-a-n quit which means greater than quit rules are the same for everybody you know like then time to move on t-h-a-n why should outside people get cb ideas and not and me not it's wrong and needs to be corrected i will be firm on this and if no happy then t-h-a-n life goes on you then post it uh on facebook uh an inspirational image where it's like the haters try to bring you down but tomorrow's another day he handed the email with a beautiful

mind reference but yeah i mean this guy has like fucking terrible grammar and lexicon and you know look he's uh let's not be ableist. Yeah, I know, I know. Maybe he's dyslexic. I don't know. But, look, I'm not worth $12 billion, and I know the difference between then and then, okay? Maybe that's why you're not worth $12 billion. You just got to focus all of your mental energy

on the stock market. There's no time for syntax. You have to be an idiot. Do an IQ test. They do, what's his name? Robert Smith? Yeah. Is it the IQ test?

Yeah, yeah, yeah. He does the IQ test. Robert Smith delivers an IQ test. They take it. If it's too high, they don't hire you. You've got to jettison the spelling of Mississippi from your brain if you want to make it on the stock market. There's no room for that shit. It's got to all be the Q4 numbers.

It's got to all be expected profit and loss from Microsoft. I need you to go and get me the numbers on Taiwanese semiconductor companies. Can you do that? I don't care if you know the difference between then and then. I need you to get me the numbers on Taiwanese semiconductors companies, but don't ask me to spell any of those words.

It'd just be beautiful if they have a terrible trade because they used the wrong there um but so uh moving right along to expert networks we we've mentioned them on this podcast before but like the book black edge gives the example of primary global research and others called gerson lehrman group and uh the idea uh the idea is that um gerson lehman Group gets a $1.2 million annual subscription fee from SAC Capital, and they let employees from public companies speak with SAC traders. They get paid anywhere from like $1,000 to $5,000 an hour for their time. And the interesting thing is, you know, of course, all these expert networks will have, you know, little cover-your-ass contracts where it's's like don't discuss any illegal non-public information but they will also like according to the frontline doc to catch a trader they have like one of these i think a vp at one of these companies on like an fbi wiretap

talking about like yeah just like look up the experts who like the traders will call back several months later because they're likely to have like the most valuable information what if you're one of what if you're one of the employees at the company and you just don't know how this works and they think that wow they really want to talk to me and just give me 1200 an hour well and that's seriously hey um so so what's up yeah so what's new with you we never really talk yeah why has it been two weeks since we talked though hey so i went out on that date with your sister uh like four months ago and you know i asked we'd go on a second date but she said like she's really not looking for a relationship right now and then i just saw her like with this guy like he's just on the train and it looked like they were in what the fuck dude

the trader is just like actively doing cocaine while you're just talking about nothing. It's the guy at the company. I'm just imagining you like pay a thousand bucks an hour and then you just think you're on a phone sex line. So what are you

wearing? My work uniform at Google? Don't you want to know the q4 numbers a hoodie a shirt i just don't know how this works yeah but uh but the point is like you know steve mentioned there like a lot of times obviously a stock trader will know what the illegal line is, but an employee at a public company will very often not.

So they'll just kind of like not know what you're not supposed to say to a public trader. So it's like, you know, and it's very easy, like if you have them on the phone for an hour to kind of steer them to places they shouldn't be talking about.

And, you know, so there's like a lot of different ways that they'll do insider trading. One thing I found interesting is that SAC was probably made money on the insider trade that Martha Stewart got charged with. Like just according to the book, it was this company called M-Clone Systems. They had a cancer drug disapproved.

And, you know, the chairman told Martha Stewart before it was publicly announced. But hours before the the public announcement before martha stewart called him an sac trader called him trying to find out what was going on so you know they have like a lot of different networks at the firm working in different places and partly um why steve cohen is able to shield himself is he will he has all these different trading groups and he will request they give him his trading ideas with a scale of one to ten of how certain they are. So obviously if a trader says I'm nine or ten out of ten certain something's going to happen, well you can assume they probably have inside information,

but as long as you don't actually know they have inside information, you have plausible deniability. And apparently, like, according to Frontline, criminal negligence doesn't really apply to insider trade or financial manipulation of the like. But so I guess to just, like, move on to, like, what happens to Steve Cohen, though I guess I should mention another thing these hedge funds will do is they'll set up independent research firms, independent research firms that like make buy and sell recommendations for stocks start popping up. But these various hedge funds will have like multimillion dollar short campaigns against companies. So it's very easy for them to just pay an independent research firm to like put out a paper saying, hey, sell this. This is a giant ponzi scheme you know so they'll push these like fraudulent independent research papers on like companies they've got a massive short position against and there's just a ton of different little tricks that

we can go through some of which are legal some of which are not that you know i think really game and turn the fucking markets into a casino and they end up like not even is this they're an enemy even of corporate america right because you could have a legitimately good quarter and no matter how good your numbers look if traders simply want they just happen to have been short on your stock there are still ways to game it to where you could actually have like a dip because like oh well the analysts were like the analysts were essentially told they should expect like something really good to happen and so they have very high expectations the company has still a strong quarter but it didn't quite meet it and then people just dump your stock because there's they're told to believe that like oh that's a that's an omen of like right yeah of of more bad activity at the company later on.

Right. And so essentially where the trouble comes is Steve Cohen and SAC Capital is insider trading so blatantly. Like if you watch the To Catch a Trader frontline documentary, they interview a Fox Business guy who says, if you ask people on Wall Street if SAC does insider trading after they fall on the floor laughing they will tell you yes um but so you know they're they're so blatant like there's a New York Post story in 2009 the one where um they reveal the uh tape of him going on the Christina show or whatever the story also says quote meanwhile there were reports out yesterday that Cohen managed

to get a Reuters story about alleged insider trading at SAC Capital killed after Cohen complained to the CEO of Thomas Reuters Market Division. So, you know, like there's all these like rumors and press reports that he's getting Reuters. Yeah. Thompson Reuters. These rumors, these press reports are getting spiked. And this all culminates in 2013.

The SEC charges him with failure to supervise. Like, they can't get him dead to rights on insider trading, so they say he's failing to oversee a culture that doesn't, that has compliance against insider trading. And again, if you watch the front line, they have, like, this deposition where, like, people ask him, ask Steve Cohen, you know, like, so what does your employee handbook say about insider trading? And he's just like, I don't recall. I can't remember. You know, do it. Yeah. Just the usual answers to a deposition.

Do it. But I wanted to just talk about the two cases that he's actually charged with so uh we should mention you know drug trials this is another common area for this shit where like you know they'll spend all this money trying to get a drug approved and then if they know in advance how the drug trial went if the thing works or if they know in advance if the fda is going to approve the thing you can make a lot of money on that so there's an Alzheimer's drug uh that they make oh I guess one other illustrative statistic um from the book is that in 2005 10% of American doctors had had paid ties to Wall Street so you know like a lot of doctors will like make a significant amount of extra money by just being like you know hey here's what this drug is going to do sometimes it's legal sometimes it's not sometimes it's actual like trial results

but so the two cases that they actually get them on are like dell computer uh which is a trader at sac sends an email to steve cohen saying hey dell computer is going to have a bad quarter and then he shorts it, and then his lawyers argue that he didn't actually see this email, you know? But then the other one is this Alzheimer's drug. Elan and Wyeth are two different companies that team up to try to trial an Alzheimer's drug. An SAC trader named Matthew Martoma manages to, like, link up with one of the doctors, I think the lead doctor on this trial and get the PowerPoint presentation of the trial results before anyone else does.

So essentially SAC has a giant like bullish position on these companies. And then he gets this PowerPoint and within a week they move to a massive short position. So it's actually apparently the largest insider trade that they've actually tried to convict in history which is they i think parit barara says they made a 275 million dollar profit on this you know massive uh turnaround short against these alzheimer's drugs powerpoint has such like a weird place in our culture because it's just this dumb slideshow program but like a lot of the snowden leaks uh

that made it public are just these powerpoint slides from like the um you know the the inside of um the nsa where it's like how we can use the techniques of magicians to trick people and then it's like clip art of a magician holding some cards in a wand clip art of a magician making some bodies disappear yeah yeah so imagine like this powerpoint that they got was like why this alzheimer's drug is uh not effective in market trials and it's like clip art of a grave and a coffin with a cross on it. The text is flying in from the sides. Yeah.

Whoever made it is like, yes. The analyst is like, oh, yeah, that means we got a short. You think we should remove the dancing old man with the speech bubble that says, where am I? Is this an Applebee's? Look, I know you like using clip art, but I think it might be a little insensitive here. Well, this isn't going to go public, is it?

No one's going to see this. My brain functions are shutting down, and I just shit myself. I just tried to fuck my daughter, because I thought she was my wife. I don't think any of this was necessary in reporting stage two clinical trial results. N equals 258. But so, yeah, so he gets this advanced look at these uh powerpoint presentations and um interestingly enough essentially what happens is um matthew martoma is the trader who gets the

powerpoints and then there's another trader called michael steinberg who was one of steve cohen's like main deputies so um the u.s attorney at the time for the Southern District was pre Perara he charges both of these people Matthew Martel is the only guy who really does hard time he gets a nine-year sentence and it's interesting where according to the book black edge they were hoping either Michael Steinberg or Matthew Martel ma would flip and turn on Steve Cohen and you would usually expect with like these Wall Street cases it's not like these are fucking mobsters you know like some fbi agent in the book says like yeah wall street people flip on each

other all the time they're most like mercenary assholes in the world you know they have no loyalty they'll give up their best friend in a second you know but for whatever reason matthew martelma eats a nine-year federal sentence and doesn't snitch on steve cohen because essentially the evidence is he gets this PowerPoint presentation he immediately calls Steve Cohen and for some reason they move to a massive short position immediately after that and so it's hard prosecutors for whatever reason decide they can't establish beyond a reasonable doubt that Steve Cohen insider traded without Matthew Martelma's testimony and he refuses to flip he eats this nine-year sentence.

And you have to imagine, you know, Steve Cohen's taking care of him. Oh, yeah. Because if he's not, that is the biggest dick move, to like eat a nine-year federal sentence for a billionaire, and he doesn't even pay your kid's college or whatever the case may be. And interestingly enough, the other deputy,ael steinberg has since he got sentenced as well but he's since been turned loose because uh according to the new york post an appeals court has really narrowed the ability of people to get nailed on insider trading

essentially like now uh they have to show that an individual who supplied a tip sought personal gain or intended to confer benefit to someone else so it's like there's a really tough legal standard for insider trading now which is you know good because it's not like it's pervasive or all-encompassing we were even talking before this started like uh there was the new argument is because insider trading is so pervasive you'll get these arguments insider trading should be legal like dylan matthews, he's now with Vox. He was then with Wonkblog, Ezra Klein's other thing. And he wrote some article about how insider trading should be legal

back in 2013 when these charges were announced. And he just quotes some George Mason University economist who's, of course, on the Koch brothers' payroll, talking about if insider trading was legal, Enron wouldn't be as bad because somebody would insider trade on it that's the most insane thing

maybe the argument should be that books should be open and we shouldn't have this like secretive right I mean then they would say like oh then they can't compete and it's like well what if you know we didn't have an economy based on cutthroat competition where billions of dollars are at stake over nothing? I think this is the way that actually isn't exactly like gambling.

Because if you legalize gambling, which I think overall would be, like, a good thing. Yeah. So, obviously, they're still going to... Countdown would need another sponsor. a good thing yeah um so obviously they're still going down with no sponsor they're they're they're still going to be they're like basically i think the reasoning they're trying to shoot for is there's always going to be a few people who abuse the system so you should take this like thing that people are willing that doesn't like necessarily hurt everyone but it does hurt a few people and then just treat the people or in this case catch the people who really abuse the system somehow.

Though the state lottery really should be ended. Where they're like, oh, well, we need it to fund schools by just soaking desperate people. No, I love all those ads where they blissfully sell utopia to the most desperate people on the planet well i mean like promising them a statistical impossibility i think i think comparing comparing what wall street traders do to exactly what gambling is is doesn't exactly work for this reason basically yeah because they work on inside information yeah we're i guess like i mean there's nothing you can know about well you can count

cards i guess but there's nothing you can really know without this clear clear cut yes he did it collision if you're playing poker or something yeah it's it's more like if a friend of the casino comes in. Yeah. Tells you everyone else's hands. House of mirrors or something. Yeah. But so pre-Barara, he can't get these two traders to flip, so he settles for SAC Capital makes a guilty plea.

They pay $1.8 billion in fines. It's really $1.2 billion since he includes $600 million he already paid to the sec i mean that what's 600 million dollars between but it is kind of funny where it's like the exact same thing with the this is why it is the spiritual sequel to the michael milken episode because the milken episode was he paid almost a billion and he's worth like three billion cohen pays a billion or almost two billion and he's worth 12 billion so it's like you know you become a multi-billionaire on just uh totally all-pervasive criminal activity and if you get

to enough of a level where you're connected enough your punishment is you give some of that back and you know I'm sure they wanted to get him into prison. It just didn't happen with the evidence. But he also shuts down his hedge fund for two years and can only trade his own money for two years. That's from January 2016 to January 2018. He can only inside trade his money for two years. Keeping in mind that if he's running a hedge fund, the way he's making money is off commit or it is yeah i guess yeah uh fees yes um which is also why hedge funds and mutual funds are i mean i guess if they're insider trading then yeah go ahead and park your money there but other than that like if

it's someone who can't beat the market and they're charging a fee you're they're just making their money off of the fee yeah you're going to your gain as an outside investor is going to be whatever you could have made as index as index fund investor minus the fee right right yeah but um essentially he can only for two years invest his own money which is 10 billion dollars so he's doing just fine and uh they've since renamed it. Again, the best strategy when you get in trouble is rename your firm. It is now called Point72 Asset Management. It has recently reopened to the public. According to their Wikipedia, they hired Palantir Technologies, Peter Thiel's company, to do a new software tool for internal compliance and surveillance.

Because on their Wikipedia, they try to talk up how much crackdown on insider trading they've done since this stuff. Well, anyone can edit that. So, you know, it's probably true. Andy, I looked up.72, and they have some open jobs. Oh, yeah? What kind of work? Let's see. Well, they have

quantitative research engineer. New York. You know how I bet that they do this, actually? Is that if you're seeing the public listing, you already don't get the job. I mean, well,

they have some other things. Let's see. Research analyst, global macro. Oh, it's in London. Okay. Are you willing to relocate? things. Let's see. Research analyst global macro. Oh, it's in London. Are you willing to relocate? Are you willing to do the podcast? I've heard the housing is kind of expensive in London.

You can be a venture portfolio operations associate. Oh, you didn't mention that part. Okay. That's in New York, actually. You could be the guy who defends them against sexual harassment lawsuits. Oh, there's an New York, actually. You could be the guy who defends them against sexual harassment lawsuits. Yeah. Oh, there's an internship in Hong Kong. Oh.

Yeah. 2020 academic summer internship. You went to college at one point. I did. I could get that unpaid job. Yeah. I guess the last thing to mention with.72 Asset Management, according to its website, it's now got about 13.5 billion

assets under management as of April 2019. It's taking public money again. Wait, what's he worth again? Like 12.8. So it's got a little more than his net worth in assets. Yes. Well, that's how you know he's really serving his customers. It's pretty much just his family office.

Yeah. It's got 1,400 employees now. They've recently, the SEC, in one of those really vicious punishments, they approved his license to take public money again. But I did want to mention before we end this here, according to the New York Post and New York Times, they've faced a sexual harassment lawsuit

as of February 2018. And just quoting from the New York Post... Me too control according to the New York Post an associate director named Lauren Bonner Bonner well there's the problem uh says male executives at 0.72 asset management call female workers quote sweetheart and girls openly comment on their looks, brag about refusing to hire and promote, quote, emotional women and host, quote, no girls allowed meetings. Which, you know what? Dudes rock. They're just channeling their inner Calvin and Hobbes.

I'm just imagining taking over one of the conference rooms and setting up a giant pillow fort with, like, a no girls allowed sign written in crayon. Look, before we dive into NVIDIA this quarter, I want to get the rules closed. Just imagine like one of their female employees being like, I'm going to see what they're really doing there. And she like just like slightly pushes the door open

and they're all sucking each other off. She alleges that according to the new york post she alleges that a company president had the word quote pussy scrawled across his whiteboard for weeks mocked a female exec as a dumb blonde and made another draft a powerpoint presentation less than 48 hours after giving birth uh you know so the kind of the kind of thing that flies at a podcast but not when you're doing endemic insider trading uh and i do like one other thing this one's from the new york times uh the lawsuit describes a woman's leadership forum cohen hosted a woman's leadership forum. Wow, woke. So woke.

In October 2016, at his 35,000 square foot mansion in Greenwich, Connecticut, one of the main speakers was a psychiatrist and Fox News contributor who, according to the lawsuit, described Hillary Clinton as, quote, an accomplished man's wife.

Yeah, so you know. That sex harassment lawsuit Accomplished man's wife. Yeah. So, you know, that sex harassment lawsuit is still working its way through the courts. But, you know, Andy is hoping to work there. So we're not going to badmouth SAC or.72 asset management too much. If anyone has any inside tips on getting a job at SEC. .72. Yeah..72. Yeah. .72.

Want to be operations associate? Oh, no, you're going for the internship. I'm going for whatever one I can get inside information on. I'm shorting the rest. I'd just like to say this entire episode has been a boiler room reference. But, you know, hey, we'll see if Stephen A. Cohen is able to repair his reputation. Yogi wasn't here, so I made it through the episode without one Stephen A.

Smith impression. And, you know, hey. I'm so sorry. Whatever. But check us out on the premium. We'll be talking about the job market, how to get a job, strategies for that. And we'll be back next week with more billionaires. Thanks for listening.

I'm Sean McCarthy. Andy Palmer. Steve Jeffries. All right. Have a good night. See you next week. Bye. Bye.