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Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

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Banks

Financial system more vulnerable after Trump victory, says BoE

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Currencies

China stock market unfazed by falling renminbi

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Categorized | Financial

Warren blasts SEC approval of Cohen fund


Posted on April 21, 2016

Left to right: Elizabeth Warren, Steven Cohen, Mary Jo White©Bloomberg

Elizabeth Warren (left), Steven Cohen, Mary Jo White

Senator Elizabeth Warren has accused a US regulator of making a “mockery” of its mission by permitting hedge fund manager Steven Cohen to register a new fund.

    In a strongly-worded letter addressed to Mary Jo White, head of the Securities and Exchange Commission, Ms Warren called the regulator’s approval of Mr Cohen’s new Stamford Harbor Capital last month an “unacceptable outcome” and “the latest example of an SEC action that fails to appropriately punish guilty parties, deter future wrongdoing, and protect investors”.

    Mr Cohen was banned from supervising funds that manage outside investor money until 2018 after an insider trading scandal that ensnared SAC Capital, a hedge fund group that he controlled. SAC pleaded guilty to insider trading in 2013 and paid a $1.8bn fine. Mr Cohen was never charged with criminal wrongdoing.

    While Mr Cohen will not supervise the activities of anyone acting on its behalf, and is not breaching the terms of his SEC agreement, he owns Stamford Harbor, and it shares the same management team as his family office, Point72 Asset Management, which manages Mr Cohen’s fortune.

    That approval, along with a settlement that specifically provided for a structure that accepts outside money, “make a mockery of the SEC’s core mission to ‘protect investors’,” according to Ms Warren.

    She also asked for a list of other individuals banned from managing funds but who were indirectly involved with SEC-registered funds.

    “I urge the commission to put procedures in place that ensure that future settlement agreements cannot be so easily undermined,” she wrote.

    Ms Warren has risen to prominence in part by accusing Wall Street of getting special favours in Washington.

    Steven Cohen lays groundwork for new fund

    Banned hedge fund billionaire registers Stamford Harbor with SEC

    Mark Herr, Point72’s spokesman, said the SEC’s conditions with Mr Cohen were clear.

    “We are not going to manage one dollar of outside money prior to January 1 2018,” he said. “We are fully meeting and continue to meet the letter and spirit of the agreement.”

    The SEC also noted that Mr Cohen would be subject to close inspection.

    “As the only law enforcement agency to charge Steven Cohen, the SEC imposed important restrictions, including a supervisory bar plus the additional oversight requirements in the settlement that are even stronger than typical remedies available under the securities law,” Andrew Ceresney, director of the SEC’s enforcement division, said in a statement.

    “Under the settlement’s significant requirements, the SEC will scrutinise his trading activity closely going forward to protect investors,” he added.