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DealBook: S.E.C. Charges Are Latest Test for Steven Cohen

July 20, 2013 by NewsMaker Leave a Comment

Steve Marcus/ReutersSteven A. Cohen, the owner of SAC Capital Advisors, is accused of failing to supervise former employees who face criminal charges.

10:18 p.m. | Updated

After a long-running investigation into insider trading at the hedge fund SAC Capital Advisors, an inquiry that has produced several guilty pleas and a record $616 million civil penalty, the government on Friday brought a case for the first time against the fund’s billionaire owner, Steven A. Cohen.

In a civil action, the Securities and Exchange Commission accused Mr. Cohen of failing to supervise former employees who face criminal charges. The case, filed as an administrative proceeding at the agency rather than a lawsuit in federal court, contends that he ignored “red flags” that should have led him to investigate suspicious trading activity at SAC and take steps to prevent illegal conduct. If the S.E.C. prevails in its action against Mr. Cohen, there are a range of possible penalties, including assessing additional fines, barring Mr. Cohen from managing money for clients, or banning him from the financial services industry for life.

Although the case stops short of accusing Mr. Cohen of fraud or insider trading, it represents the first government action brought directly against him after an inquiry that has persisted for nearly a decade.

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And while the government has taken its first direct shot at Mr. Cohen, it is unlikely to be the last. Federal prosecutors and the F.B.I. are continuing to build a criminal case against SAC, according to people briefed on the matter, who spoke on the condition of anonymity. The authorities expect to announce charges as soon as this summer, the people said, noting that prosecutors might indict other traders at SAC or the fund itself, a move that would effectively destroy the company.

Though a legal deadline to file some insider trading charges is approaching, authorities are planning to navigate around that requirement by filing a broader criminal conspiracy case against SAC, these people said. As long as one of the trades cited in the case took place in the last five years, then the government has leeway to include older trades to highlight a continuing scheme.

Mr. Cohen is not out of the woods, either. In May, federal authorities issued subpoenas to Mr. Cohen and five of his senior executives to testify before a grand jury. Mr. Cohen declined to testify, exercising his constitutional right against self-incrimination, the people briefed on the matter said.

Even if a criminal case never materializes, the S.E.C.’s action on Friday is a blow to Mr. Cohen, who has built SAC, which is based in Stamford, Conn., into one of the world’s largest and most powerful hedge funds, with about 1,000 employees and $15 billion in assets at the start of the year. It has a nearly unparalleled investment record, delivering nearly 30 percent annual returns, on average, over two decades. SAC’s investors, however, have already withdrawn billions of dollars from the fund this year as the government’s investigation has intensified.

Keith Bedford/ReutersMathew Martoma, a former employee of SAC Capitol Advisors, has denied charges of insider trading and is set to go to trial Nov. 4.

Mr. Cohen, 57, thought he put his legal troubles behind him in March when SAC agreed to pay a $616 million civil penalty to the S.E.C. The case resolved insider trading actions connected to the suspected misconduct of two former employees, Mathew Martoma and Michael S. Steinberg, though they did not directly implicate Mr. Cohen.

The S.E.C. filed its latest case, which accused Mr. Cohen of failing to supervise the two employees, a day before the five-year legal deadline to bring a case related to trades that Mr. Martoma made in July 2008.

“Hedge fund managers are responsible for exercising appropriate supervision over their employees to ensure that their firms comply with the securities laws,” Andrew J. Ceresney, co-director of enforcement at the S.E.C., said in a statement.

On Friday, Jonathan Gasthalter, an SAC spokesman, said the S.E.C.’s action had no merit. “Steve Cohen acted appropriately at all times and will fight this charge vigorously,” he said. “The S.E.C. ignores SAC’s exceptional supervisory structure, its extensive compliance policies and procedures, and Steve Cohen’s strong support for SAC’s compliance program.”

The firm’s compliance policies and procedures have come under fire as many former employees have found themselves under government scrutiny. Including Mr. Martoma and Mr. Steinberg, nine former SAC employees have been tied to insider trading while at the firm; four have pleaded guilty to criminal charges. Mr. Cohen has not been accused of any criminal wrongdoing.

Mr. Martoma, 39, and Mr. Steinberg, 40, have each pleaded not guilty to criminal insider trading charges and face separate trials in November. Lawyers for each declined to comment on the S.E.C. action against Mr. Cohen. Representatives for the United States attorney’s office for the Southern District of New York and the F.B.I. also declined to comment.

Despite the substantial investor withdrawals, Mr. Cohen has vowed to continue managing funds for outside clients, to whom he charges some of the highest fees in the hedge fund industry. Yet Mr. Cohen could return investors’ money and still run a sizable business that managed his own personal fortune. His wealth accounts for more than half of the fund’s $15 billion in assets.

The S.E.C.’s case against Mr. Cohen intensified this spring, people briefed on the case said, soon after the agency struck the settlement with the fund. The agency sent him a so-called Wells notice in late May, the people said, warning that the agency’s investigators would soon recommend charges.

Mr. Cohen’s lawyers pushed back in recent weeks, outlining a potential defense to the charges. But the agency decided to proceed, one person said, holding a special meeting with the agency’s five commissioners to consider the charges. The meeting was separate from the agency’s typical weekly gathering to discuss enforcement cases, a measure that allowed the agency to keep a tight lid on the case.

The case is not a slam-dunk. The S.E.C. must show not only that Mr. Martoma and Mr. Steinberg violated the law and that they operated under Mr. Cohen’s supervision, but also that Mr. Cohen failed to “reasonably” supervise them.

It could benefit the agency that the case will appear on its home turf. Instead of a being heard by a judge in federal court, the proceeding will take place before an S.E.C. administrative law judge, who will determine what penalties, if any, should be assessed against Mr. Cohen. The S.E.C. says that the illicit trading earned SAC profits and avoided losses totaling more than $275 million.

Friday’s filing provides additional details about two sets of trades made by SAC in 2008. The first involved Mr. Cohen’s collaboration with Mr. Martoma in accumulating large positions in the pharmaceutical companies Elan and Wyeth, which at the time were jointly developing an Alzheimer’s drug. In November, federal prosecutors charged Mr. Martoma with obtaining secret information from a doctor overseeing the drug’s clinical trials. That doctor, Sidney Gilman, has agreed to testify against Mr. Martoma.

Inside SAC, a number of other drug stock analysts at the fund objected to the large positions, but Mr. Cohen told them that he was following Mr. Martoma’s advice because he was “closer to it than you,” according to the court filing. The S.E.C. said that in a later instant message, Mr. Cohen said that it seemed as if Mr. Martoma “has a lot of good relationships in this area.”

Mr. Cohen also knew of a second doctor who might possibly have had secret information about the clinical trials, the S.E.C. said. Rather than express concern about the fund possessing potentially confidential information, Mr. Cohen encouraged Mr. Martoma to talk further with the doctor, according to the court filing.

On July 21, 2008, after building sizable holdings in Elan and Wyeth, SAC began aggressively selling shares in the two companies. The day before, on a Sunday, Mr. Martoma had a 20-minute phone call with Mr. Cohen. It is unclear what was said during that conversation, but Mr. Cohen, in a deposition that he gave to the S.E.C. last year, said that Mr. Martoma told him he had lost conviction in the positions.

The second trade at issue in the case involves shares of Dell. The S.E.C. also faults Mr. Cohen for not ferreting out what they suspect was illegal trading in shares of Dell in August 2008 by Mr. Steinberg and another former SAC employee, Jon Horvath, who pleaded guilty to criminal charges last year.

Friday’s court filing cites an e-mail about Dell that an SAC trader forwarded to Mr. Cohen, who was working at his summer home in the Hamptons. The e-mail was from Mr. Horvath, who worked under Mr. Steinberg, saying that he had a “2nd hand read from someone at the company” and went on to provide detailed information about Dell’s financial performance.

“Please keep this to yourself as obviously not well known,” Mr. Horvath wrote.

The S.E.C. says that based on this e-mail, Mr. Cohen should have taken prompt action to determine whether the fund was engaged in insider trading. Instead, according to the agency, Mr. Cohen quickly sold his small Dell position just before the company announced earnings.

Three hours after the earnings release, Mr. Cohen e-mailed Mr. Steinberg: “Nice job on Dell.”

Article source: http://dealbook.nytimes.com/2013/07/19/s-e-c-files-civil-case-against-steven-cohen-of-sac/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: billionaire owner, mr cohen, sac capital advisors

Journalist Held in Beijing, Friends Say

June 12, 2013 by NewsMaker Leave a Comment

Two copies of an unsigned police warrant dated June 1 found recently by friends in the apartment of the journalist, Du Bin, said that it had been issued for “disturbing order at a public place.” That falls under an administrative statute the police can use to hold people for up to 15 days for minor offenses, said Jerome A. Cohen, a scholar of Chinese law at New York University.

The police could release the detainee during that period, move that person to China’s “re-education through labor” system, or seek a formal criminal charge, Mr. Cohen said.

One friend of Mr. Du said he had heard that the police were investigating the journalist, who is 41, for illegal business activity related to his books, many of which are on politically delicate subjects. It is a charge that officials have used before against Chinese journalists writing books on such subjects even when, as with Mr. Du, the books have been published outside mainland China.

His most recent book, “Tiananmen Massacre,” is mostly a compilation of previously published accounts from various sources of the government crackdown of June 4, 1989. It was released in late May by Mirror Books, which has offices in New York and Hong Kong.

Friends of Mr. Du, a self-taught photographer, also said they believed the authorities had been angered by his work on the hourlong documentary film he recently completed on the Masanjia labor camp and what inmates described as abuses there. Many of the Masanjia camp’s prisoners are petitioners seeking redress from the state for perceived wrongs.

Mr. Du had also shown the film at least once in Hong Kong, and a version was posted online on May 1. Mr. Du was escorted from his apartment on May 31 by more than 10 police officers, two of them in uniforms and the rest in plain clothes, according to two friends who had spoken with the landlord’s family. Relatives of Mr. Du said the police had not notified them of his whereabouts or why he is being held.

Mr. Du’s photography work, some of which has appeared in The Times, has covered a wide range of subjects, from petitioners to the Three Gorges Dam to the village of Liangjiahe, where President Xi Jinping lived for seven years during the Cultural Revolution. Among the subjects of his books are Mao Zedong’s reign, the Japanese invasion of China and the rebel artist Ai Weiwei.

Jonathan Ansfield contributed reporting from Beijing, and Chris Buckley from Hong Kong.

Article source: http://www.nytimes.com/2013/06/13/world/asia/chinese-journalist-beijing.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: family relatives, mr cohen, new york university

Encounters | Michael Musto: Michael Musto, After The Village Voice

June 5, 2013 by NewsMaker Leave a Comment

Mr. Musto was about to be a bartender.

But this was not just any bartending job. His ouster had been lamented by much of the New York media (“The @villagevoice firing @mikeymusto amounts to @villagevoice firing itself: auto-da-fé,” tweeted The New Yorker’s Philip Gourevitch), and the outrage had begun to open some surprising doors.

Mr. Musto would soon be mixing drinks for the actors Ethan Hawke and Aaron Tveit on Andy Cohen’s talk show on Bravo, “Watch What Happens Live.” The role had previously been filled by Broadway actors, reality TV stars, an Olympic athlete and the guy from that salad dressing commercial whose shirt keeps coming off.

“You’re the king,” Mr. Cohen enthusiastically told Mr. Musto.

“You’re very kind,” a seemingly touched Mr. Musto responded.

Before the show went on the air, Mr. Cohen explained how Mr. Musto, 57, ended up as the evening’s mixologist.

“When I heard what happened, I said to the booker, ‘I want him on as soon as possible,’ ” Mr. Cohen said. “He is the kind of ‘legends of New York’ we embrace.”

When the cameras rolled, Mr. Cohen wasted no time in expressing his opinion.

“I was shocked, shocked last week when The Village Voice laid off the entire reason for reading their newspaper, gossip columnist Michael Musto,” he told his audience.

“Wait. You were shocked?” asked Mr. Musto, the camera catching a look a mock surprise as the applause died down. “And first of all, I got this bartending job.”

Earlier, in the green room getting ready to go on, Mr. Musto said he was overwhelmed by the coverage of his departure (one sample, from The Daily Beast: “The Village Voice Was Crazy to Fire Him: 5 Reasons Why Michael Musto Matters”) and by the stunning end to his column, La Dolce Musto, after nearly three decades because of cutbacks at the weekly.

“It was horrifying,” he said. “That paper was my heart and soul.”

But bartending wasn’t his only offer. Mr. Musto said he was starting a weekly question-and-answer interview column for Gawker (“with a scandal celebrity or someone promoting something, or someone who has made a mark on the culture”) and a column named “Musto! The Musical!” on Out.com, the first installment of which appeared on June 3.

“The Out column will be similar to my Voice column,” he said. “A breathless romp through all the scenes that make New York tick.”

Mr. Musto also appears on “Theater Talk” on Channel 13, where he will be doing a post-mortem on the Tony Awards on Sunday. And there had been an appearance on “Smash,” an NBC series that was just canceled. “Did you see me on the last episode?” Mr. Musto asked. “I was adorable.”

Born in Bensonhurst, Brooklyn, he started as a freelancer while at Columbia and never looked back.

“I’m married to my job,” he said. “I don’t even have a potted plant to take care of. It’s a roller coaster of fun, work, fun, work. I get to go to parties, to movie premieres, to fashion shows and write whatever I want.”

Mr. Musto describes himself as a cultural anthropologist, a social worker and a gossip columnist, a title that he noted was often shunned by others. La Dolce Musto’s trademark blind items became popular guessing games among Voice readers (“I used to joke that if you guessed Courtney Love, you were usually right,” he said). And, proving there is no such thing as bad publicity, nightclub denizens lobbied to be included in the “Ten Biggest Nightmares in New York.”

“I’m primarily a humorist,” he said. “I don’t have investigative skills. People read me for my take on things.”

While Mr. Musto was the first to report on a club-kid murder in the mid-1990s, as well as chronicle the sometimes delicate dance the news media did with gay celebrities who were not yet out, his forte was mapping the downtown social scene. The column put the transsexual performance artist Amanda Lepore and the party promoter Susanne Bartsch on the same level as Meryl Streep and Julia Roberts.

“I wanted to champion people who made New York night life worth visiting despite the city’s best efforts to push it down,” he said.

At 11 p.m., Mr. Musto went on the set and for the next 30 minutes fulfilled his wisecracking bartending duties with aplomb. When Mr. Hawke tutored Mr. Cohen on the name of his trilogy of movies tracing a couple’s relationship (“Before Sunrise,” “Before Sunset,” “Before Midnight”), Mr. Musto toasted the actor with “Before Tequila Sunrise.”

The show over, Mr. Musto exited into the sultry night and took off the two locks anchoring his no-frills bike to a parking sign. It was midnight and he was about to head uptown to the XL Nightclub on West 42nd Street. Billy Porter, the Tony-nominated star of the Broadway musical “Kinky Boots,” was going to be there.

It might make a good item for his next column.

Article source: http://www.nytimes.com/2013/06/06/fashion/michael-musto-after-the-village-voice.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: bartending job, mr cohen, village voice

DealBook: Latest Domino in SAC Trading Inquiry Is a Top Manager

March 29, 2013 by NewsMaker Leave a Comment

11:59 a.m. | Updated

A SAC Capital Advisors portfolio manager was arrested by federal agents on Friday, becoming the most senior employee at the giant hedge fund ensnared in the government’s vast insider trading investigation.

Michael Steinberg, 40, was arrested at his Park Avenue apartment early Friday morning and taken out of his building in handcuffs. He has worked for SAC and its owner, the billionaire investor Steven A. Cohen, since 1997 and became one of the firm’s senior portfolio managers, focusing on technology stocks.

Mr. Steinberg entered a plea of not guilty in Federal District Court in Manhattan on Friday and was freed on $3 million bail.

Hedge Fund Inquiry

Mr. Steinberg’s arrest had widely been expected, and is the latest in a swirl of activity surrounding the government’s investigation of SAC. Earlier this month, Mr. Cohen signed off on two settlements in which the firm agreed to pay federal securities regulators $616 million to resolve two insider trading cases against SAC. On Thursday morning, a federal judge refused to approve the larger of the two settlements, a $602 million pact, raising concerns over a provision that allows SAC to avoid admitting that it did anything wrong.

The smaller of the settlements, for about $14 million, related to trading by Mr. Steinberg and a fellow portfolio manager, Gabe Plotkin, according to people familiar with the case. Mr. Plotkin has not been charged with any wrongdoing.

Mr. Steinberg’s name first surfaced in the broader inquiry last September when a former SAC analyst who worked under him pleaded guilty to being part of an insider trading ring that illegally traded the technology stocks of Dell and Nvidia. As part of his guilty plea, the analyst, Jon Horvath, implicated his former boss, Mr. Steinberg, saying that he gave the confidential information to Mr. Steinberg and that they traded based on the secret financial data about those two companies.

In recent months, Mr. Horvath has met with authorities and provided them with information about his former boss.

“As alleged, Michael Steinberg was another Wall Street insider who fed off a corrupt grapevine of proprietary and confidential information cultivated by other professionals who made their own rules to make money,” Preet Bharara, the United States attorney in Manhattan, said in a statement on Friday.

The Securities and Exchange Commission filed a parallel civil lawsuit against Mr. Steinberg on Thursday.

The government had previously identified Mr. Steinberg, a technology stock specialist in SAC’s Sigma Capital unit, as a co-conspirator in a case involving Mr. Horvath and two former hedge fund managers at other firms, Todd Newman and Anthony Chiasson. A jury convicted Mr. Newman and Mr. Chiasson in December on charges that they traded shares of Dell while in possession of secret information about the technology company.

E-mail from Mr. Steinberg that surfaced during testimony at the trial of Mr. Newman and Mr. Chiasson related to trading in Dell are likely to be part of the charges unveiled on Friday.

In an e-mail from August 2008, sent a few days before Dell’s quarterly earnings announcement, Mr. Horvath disclosed details about Dell’s financial data to Mr. Steinberg and Mr. Plotkin.

”I have a secondhand read from someone at the company,” Mr. Horvath wrote. ”Please keep to yourself as obviously not well known.”

Mr. Steinberg replied: ”Yes normally we would never divulge data like this, so please be discreet. Thanks.”

In another e-mail, Mr. Steinberg told Mr. Horvath and Mr. Plotkin about a conversation that he had with Mr. Cohen about conflicting views of Dell inside SAC. Mr. Plotkin owned a large Dell position, while Mr. Steinberg was short, meaning that he thought shares of Dell would drop in value.

”Guys, I was talking to Steve about Dell earlier today and he asked me to get the two of you to compare notes before the print” — meaning before the company’s earnings release — ”as we are on opposite sides of this one,” Mr. Steinberg wrote.

Mr. Berke, the lawyer for Mr. Steinberg, said in a statement Friday, “At all times, his trading decisions were based on detailed analysis as well as information that he understood had been properly obtained through the types of channels that institutional investors rely upon on a daily basis.”

Mr. Steinberg’s case will keep the spotlight on Mr. Cohen, 56, who has been a central focus of the government’s investigation. Mr. Cohen has not been charged with any wrongdoing, and has told his employees and investors that he believes that he acted appropriately at all times.

The pressure on Mr. Cohen escalated last November, when prosecutors charged Mathew Martoma, a former SAC portfolio manager, with trading in the drug stocks Elan and Wyeth based on secret information from a doctor related to drug trials. Mr. Cohen was involved in the trades at the center of the Martoma case, but the government has not claimed that Mr. Cohen possessed any secret information. Those trades were the subject of the S.E.C. civil action that SAC settled for $602 million.

Amid his legal woes, Mr. Cohen, who is said to be worth nearly $10 billion, has indulged in a little retail therapy in recent days, purchasing a Picasso painting for $155 million and buying a oceanfront estate in East Hampton for $60 million.

John Marshall Mantel for The New York TimesMichael Steinberg entered a plea of not guilty in Federal District Court in Manhattan on Friday and was freed on $3 million bail.

This post has been revised to reflect the following correction:

Correction: March 29, 2013

Because of incorrect information supplied by prosecutors, an earlier version of this article gave the wrong age for Michael Steinberg, the SAC Capital Advisors portfolio manager who was arrested on Friday. He is 40, not 41.

Article source: http://dealbook.nytimes.com/2013/03/29/sac-capital-manager-arrested-on-insider-trading-charges/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: black tie affair, mr cohen, portfolio manager

Against the Odds, Starting a Tech Business in France

February 3, 2013 by NewsMaker Leave a Comment

PARIS — For a young entrepreneur starting a company in Paris, Fabien Cohen could not have picked a worse time: French businesses are still recovering from the financial crisis and facing potential tax increases, and many with deep pockets have taken flight from the country.

Worst of all for Mr. Cohen, many of his friends — other “start-uppers” in their 20s — have packed their bags for the more business-friendly climes of London, San Francisco and even Bangkok or Rio de Janeiro.

“Everyone I know who is in his or her 20s wants to find their own experience, and that is overseas,” Mr. Cohen said. “There is a necessity to see elsewhere.”

Without the means to make the jump himself, Mr. Cohen, 25, is making do. His smartphone application, Whoozer, which he likens to Circle, an app that notifies people when their friends or contacts are nearby, was set to be introduced in December but hit a technical snag a month earlier. His bank balked at putting up more money, and potential investors decided to wait on the sidelines. He could barely pay his employees last month.

And yet, Mr. Cohen is making it work. He switched banks and secured a new credit line at the last minute. His fledgling company, made up of a dozen or so employees, tinkered with the business strategy and clinched a vital sponsorship to introduce Whoozer exclusively at a top French business school, ESCP Europe, on Monday. In March, they plan to introduce the service in three other business schools.

“The climate is still tricky, but I’ve jumped in at the deep end,” Mr. Cohen said. “Things are still complicated in France, but that doesn’t prevent me from doing anything.”

France’s business ecosystem thrives on contradictions — the country has some of the highest labor costs in Europe and restrictive regulations, and yet its companies regularly make the Fortune 500 list; it has highly skilled graduates and engineers but struggles to compete globally; it has an alphabet-soup of agencies intended to support fledgling businesses, but they are so lacking in coherence that they remain unheard of to many; there is a vibrant investor community ready to commit funds, but only once an entrepreneur has a proven track record; and the French embrace money, but not bling.

The ambiguities perhaps capture well what some call France’s “Raymond Poulidor syndrome,” after a former Tour de France cyclist who never won a race but never gave up.

“He was always number two. And the French really love him,” said Matthias Berahya-Lazarus, who heads Bonial, a Web service that offers localized shopping catalogs and discounts. “Likewise, the French like entrepreneurs when they remain very discreet and don’t transform into a businessman. That’s where the evil begins. So they like the number two. They don’t like success. They have a problem with wealth and with money.”

Aside from the day-to-day headaches and dilemmas familiar to any entrepreneur, French businesses have their wings clipped by onerous social charges paid to the government based on the salary of the employee. Companies need to think twice before hiring and firing, when employees are often due extensive severance benefits. They also need to coax financing from a traditionally risk-averse market and console themselves with the relatively small clout that businesses hold in government.

Mr. Cohen’s dogged pursuit, often accompanied with wry humor, reflects the ingenuity of French entrepreneurs in finding ways to wriggle out of predicaments.

“They’ve lived under constraints for so long they’ve become quite good at that,” said Jean-David Chamboredon, who runs the French Internet entrepreneurs’ fund ISAI.

But the web of regulations can also be a blessing, in the form of loopholes.

One young company chief outsmarted the “system” by taking advantage of what he described as a badly coordinated tangle of benefits for job seekers wishing to create companies to pocket enough funds for his start-up.

Article source: http://www.nytimes.com/2013/02/04/technology/against-the-odds-starting-a-tech-business-in-france.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: mr cohen, restrictive regulations, tax increases

Steven A. Cohen Is Absent at Art Basel Miami Beach

December 9, 2012 by NewsMaker Leave a Comment

Among the shoppers were prominent collectors like Peter Brant, the newsprint executive, who strolled with the actor Owen Wilson. At the Gagosian Gallery booth, P. Diddy gave a hug to the casino mogul Steve Wynn beside a $2 million sculpture by Roy Lichtenstein.

But one notable titan of this realm was missing: Steven A. Cohen, the hedge fund billionaire, who in less than six years has acquired one of the market’s richest troves, with works by Manet, Monet, Jackson Pollock, Andy Warhol and Damien Hirst, to cite just a few.

In recent weeks, his name has surfaced with the legal troubles of Mathew Martoma, whom federal prosecutors have accused of insider trading while working at Mr. Cohen’s firm in Connecticut, SAC Capital Advisors. Mr. Cohen has not been charged with any wrongdoing, but there has been speculation that the government hopes to leverage the case against Mr. Martoma into charges against Mr. Cohen.

Does that possibility worry luminaries in the art world? A quick survey of gallerists, advisers and collectors suggests it depends on whom you ask. Plenty of people doubt that Mr. Cohen will ever be in genuine jeopardy and others think that even if he is, the art market now has so many well-heeled players that the absence of one buyer wouldn’t have a notable impact.

Then there were the gallery owners who had sold works to Mr. Cohen. As a general rule, the more business they have conducted with the man, the more worried they are likely to be.

“It’s disconcerting,” said Timothy Blum, co-owner of Blum Poe, a gallery in Los Angeles. “We’re talking about a lot of liquid,” he added, meaning money. “A lot of liquid. I’ve never calculated it out, but he’s responsible for a significant percent of our business.”

For Mr. Blum and other elite gallery owners, there is sincere dread at the notion, however remote, that Mr. Cohen may one day be sidelined. Known in the securities world for astounding investment returns and an occasionally volcanic temper, he is described by dealers as the ideal collector — warm, dedicated, eager to take home the best pieces and unafraid to spend what it takes.

“We would absolutely hate to have him not active in the market, I can wholeheartedly say that,” said David Zwirner, who owns a gallery that bears his name in the Chelsea section of Manhattan. “This man is a friend of mine. I called him last week — ‘How are you? What’s going on?’ I think the art world is rooting for him. I’m rooting for him. I wish he were here right now.”

Two years ago, Mr. Cohen arrived at Mr. Zwirner’s booth in the opening minutes of the V.I.P. preview day and dropped $300,000 on a work by Adel Abdessemed, an Algerian-born artist who lives in Paris. Within the hour, Mr. Cohen had reportedly spent an additional $180,000 at Blum Poe for a work by Tim Hawkinson called “Bike.”

The fair didn’t officially open until Thursday, but on Wednesday the convention center was already radiating an air of unabashed opulence. Cavernous, and crammed with product, the place is a kind of Costco for the rich, where the prices range from a low of a few thousand dollars to a high of “we don’t give out that information.” Women pushing carts handed out free flutes of Ruinart Champagne, the official Champagne of Art Basel Miami Beach.

Will Ferrell, the comedian, was one of handful of celebrities in the crowd. Wearing mirrored aviator sunglasses and sporting a green shirt with “Ireland” emblazoned on the back of the neck, he said he already knew what he wanted.

Article source: http://www.nytimes.com/2012/12/07/business/steven-a-cohen-is-absent-at-art-basel-miami-beach.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: absence of one, mr cohen, steve wynn

DealBook: S.E.C. Charges Are Latest Test for Steven Cohen

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