Saturday, March 15, 2014

Steve Cohen; still out of jail but not out of the woods

I'm a sucker for the rags-to-riches story. I've met dozens of European immigrants who came to Canada and made something out of nothing. Italians, Greeks, Armenians, Jews, Germans, Ukrainians... you name it, this was a land of opportunity for anybody with a bit of good luck and a big work ethic. Some became merely comfortable, others became wealthy enough to keep their grandchildren in cocaine and Porsches in perpetuity.

All of them built something. They started a one man machine shop that thirty years later was a global concern, or they started an excavating company that grew into a major infrastructure provider, or they started a construction business that became a major real estate company... they built real stuff in the real world. They employed real people in real jobs in the hundreds of thousands.

Which sets them apart from the new breed of capitalists, guys like Steven A. Cohen.

Cohen's is certainly a rags-to-riches story. He came from nothing and rode the rising tide of the "Rumpelstilskin economy" to great wealth, employing only a small army of straw-into-gold spinners, whose primary job it was to make Steve wealthier.

Alas, Steve has been laboring under a cloud of insider-trading allegations for the past few years. Multiple investigations have led to the dismemberment of his hedge fund and a repositioning of his business concerns as a closed shop managing only Mr. Cohen's personal fortune of $9 billions.

This story from Bloomberg suggests that he may not be out of the woods yet.

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