Did Blackstone Sponsor Insider Trading?

The past is often an indicator of the present and even of the future! 

Or simply the reverse and, may not be at all indicative of anything - à double entente! The point being: the title of this Loud Calumny post could equally have been “Does Blackstone Sponsor Insider Trading?”

Fund Portfolio Management - FPM, examines the increasingly accepted normality of "systemic corruption in corporate and political activities", and which the mainstream media  labels as “crony capitalism”.  A public induction information or label which grossly understates the scale of fraud, theft and malfeasance in the name of economics, by a cabal of business leaders. The deduction from such misrepresentation in the media is  that the beguiled public believes that this is the natural corrupt state of ethics in business. FPM prefers the nomenclature "Sickly Paradise", for the current mode of collusive capitalism referred to as technically as "oligarchies".

The damning evidence for this systemically rigged aspect of international economic life is through understanding the latent double-meanings in financial services, particularly nowadays.  Looking at a period of the last 30 years and inspecting the advent of financier billionaires, FPM have tracked and listed many purely self-serving professionals (and implicitly professions too), that are organised in society as worthwhile liquidity financiers for the public good (see relevant list below of the 5 billionaires at just Blackstone Group, which was founded in 1985 - 30 years ago!).

Public Reputation is a media-hyped generalisation to respect that these listed and other billionaires made money legitimately through industry skill luck and whatever else to succeed. The misused corporate intelligence by mainstream media is simply the requisite "organised lying" by various classes of mercantilism. This organised lying extends to the profession of government and politicians, who by their complicity as legislators condone and even perpetuate duplicitous activities. The stark “wealth inequality” in society in the new millennium is concomitant of this sickly paradise of billionaires.  FPM revealed the embodiment of this “sickly paradise” in its enterprising examination of Blackstone Group (BX) and S.A.C. Capital; the latter hedge-fund-sytematic cheat is abbreviated to "S.A.C." henceforth.

Even after the multi-billion dollar legal settlement with the government authorities in winter 2013 for a guilty corporate criminal conviction, Steven A. Cohen still has not, and probably cannot, be indicted on criminal charges. His management of an organisation culture manifest with insider trading suspicions since at least 1992, formerly bearing the initials of his full name, S.A.C. Capital, is much benignly reported in the sycophantic journalism of mainstream media. Mr Cohen's embroilment  in insider-trading allegations stem from as far back 1985, as alleged by Patricia Cohen, his former wife - she effing should know! S.A.C. changed its name to Point72 Asset Management after its guilty-plea and record penalty-fine conviction; a superficial makeover representing a shallow marketing and re-branding exercise. Done in complicity with #msm and #PublicRelations duplicity. Part of the main-name re-branding is "Point72", which is actually based on its current address! And would you believe it, S.A.C's address is and was, 72 Cummings Point Road, Stamford, Connecticut.

General Ethical Digression: This symptom of “too-big-to-jail” (as headlines satirically underplay), speaks hideous volumes of the protagonists’ natures and their ethical modus operandi in financial services, and extended organisations, if told in the context of reputation and calumny. Especially following that the decade long multi-agency investigation and legal prosecutions  turns out in the main to be a dumb-show of reprimanding white collar financial perpetrators for the cause and public-cost of “The Great Recession”. A public cost which imposed austerity instead of prosperity on the majority of the taxpaying population. The explanation of this dubious empty tactic is embedded in the political atmosphere of the day, where the tag “politicianRcriminals” seems highly appropriate. This latter aspect of crony capitalism is relevant, when considering that the President of The U.S. (#POTUS2016) elections is in November this year. American primaries or caucus for the nomination of the respective party leaders is currently underway.

In respect of serving the public interest - which is the genuine part of FPM’s mission and aim - the worst possible ending to a decade long investigations and prosecutions for insider-trading illegality / fraud and conspiracy has come about. This is the 30-years carry-on of excessive capitalism, mentioned as the sickly paradise, or corrupt crony capitalism, and elaborated with an inaugural case-in-point enterprise.

Back to our case-in-point protagonists: Not only that a civil liability proceedings was the only punitive action against the targetted kingpin of this era's insider-trading enforcement, Mr Cohen as a reputed "Artful Dodger", has been given a mere proverbial “slap on the wrist” by the regulator and U.S. Justice. Government funded regulator of the securities laws in America, the Securities and Exchange Commission - S.E.C, in conjunction with Department of Justice - D.O.J. and even the Federal Bureau of Investigations - F.B.I. have all been expediently outwitted by the "Disgracefully Dubious Coign". View below and disseminate electronically the FPM poster showing Mr Cohen's public reputation, awarded 20th Jan 2016:

Does the occasional multi-billion settlement compensate for the systematic fraud that creates 1% of billionnaires while 99% wallow in austerity and debt-servitude? There is name-and-shame reprisals if not the furore of the public revolution still to face. Watch this space. For financial operators playing within the written rules of the zero-sum investments game, this “slap” is hardly appropriate for the grand larceny in the conduct of investment management, that S.A.C Capital admittedly conducted. Some real-money equity traders know their positions were shafted by illegal confidential information - right?

To date, the greatest future detriment to the long-term-saving publics' portfolios (pensions, endowments, sovereign wealth funds etc), has been that in this era of insider-trading crackdown, the law has been made EASIER to commit IT, of course without being caught. S.A.C. has been caught and punished for some USD$ 2 bn, yet Mr Cohen its undoubtable orchestrator is scott free, and has reportedly net worth of approximately, USD$ 10 bn - astonishing!  Is that the cost of a firm willing to sell their employees' souls to the devil, and for potentially doing some jail-time?! (Ed note: I do mere over-time when working, that's all!)

Preet Bharara, representing U.S. justice and acting as district attorney for Manhattan in this era of enforcement, is the running parody that FPM dub “The Punch and Judy Show”. The Department of Justice – DoJ in the U.S., have now had their numerous convictions and jail sentences for insider trading being vacated / quashed. The exoneration of insider-trading perpetrators,  yet earlier judged and convicted in U.S. Court proceedings, demonstrates disproportionate justice in financial services as at a historic low, not to say farcical shambles. Acquitted on a technicality of insider-trading laws, include S.A.C. heavyweight honcho Michael Steinberg. The other small fry at S.A.C. who is serving time for his crime is Mathew Martoma.

In the era of insider-trading investigations following the TMT-bubble crash at the turn of this century, Arthur J. Samberg, founder of Pequot Capital Management, and others were prosecuted largely on circumstantial evidence, given that insider trading by its ambiguous nature is difficult to prove. Read more of this historic account in New York Times from 2006: S.E.C. Is Reported to Be Examining a Big Hedge Fund. Again, remarkably some 30 or so years ago, these hard working Jewish coterie (See picture below, Dennis Levine later), actually served jail time as senior executive financiers in that era of insider-trading rackets. Lady Justice worked then, sadly she has nowadays been bought and paid-for!

Insider Traders Properly Punished in 1986 - left to right: Ivan Boesky, Michael Milken and Martin Siegel

No Smoke Without Fire: Of Repuatation
#NSWF:Reputation 

1) From the inaugural exhaustive study of insider trading, FPM grants the S.E.C. “Dog Without Teeth” Degree. FPM elaborating on this Federal regulator's stymied enforcement would not be as pertinent as a former trial attorney at the S.E.C. Jim Kidney's parting shot at his retirement. Read about it in extracted form here (The original full speech has been removed from public domain by S.E.C. workers union!)

2) One of S.A.C. Capital’s earliest and biggest backers was Blackstone Group’s division, Blackstone Alternative Asset Management - BAAM. A NSWF:Reputation Degree awarded to BAAM: “Sham Sponsoring Schwarz”[1] 

BAAM bragg on their corporate website:
“Blackstone Alternative Asset Management (BAAM®) is the world’s largest discretionary allocator to hedge funds, with $69 billion in assets under management as of December 31, 2015". 

Blackstone Group, as a prominent sponsor and investor in the discredited, disreputable and now defunct in name S.A.C. Capital, is attributed a degree of guilt by association, as well as others (on the “FPM Reputation Blacklist”). Our induction and deduction suggests that certain executives, especially its chief executive officer J. Tomlinson Hill, also known as Tom Hill, probably did know about illegal activities at Mr Cohen's firm, and perhaps actively encouraged it for the spectacular returns; and that Blackstone even chose to turn a blind eye about early suspicions and reputation for insider trading by S.A.C. Capital’s owner manager. FPM adduces this thick-as-thieves conclusion from its template analysis, and is not intended as any slighting slander, and indeed to speculate on reputation:

“Mr Hill, did you know about Steven A. Cohen’s insider trading reputation, and what was your basis for investing with a reputed cheat; was his evasion of legal indictment a reputable kudos as source of exceptional trading returns?” FPM Princpal

FPM cite below a summary of "Circumstantial Evidence", once used in law to convict illicit traders. From these, FPM adduces between the hidden motivations with the public pretext:

1) Blackstone Pulled-Out Its Investment With S.A.C. At The Last Hour -
By fleeing a sinking ship at the last moment demonstrates conviction and faith in S.A.C. being able to survive the regulatory and legal enforcement onslaught. FPM belives the last minute exit was less about courage and support that their man was innocent, and more about face-saving exercise done to avoid guilt by association, and to limit wild-fire damage to its reputation. Remember that hedge fund investing firms that had wittingly or otherwise invested in Bernard Madoff's fraud lost a lot of credibility for their due diligence e.g. Union Bancaire Privee - UBP

2) Blackstone Sponsored Convicted DiamondBack as Investors Too -
The S.A.C. related insider-trading investigations also included, now failed, Diamondback Capital. The fund manager there was Todd Newman. As a former S.A.C. Capital workers, along with another convicted manager and co-founder of Level Global Investors, Anthony Chiasson, they both were handed a landmark verdict in the appeals court. Their criminal inider-trading convictions verdict from December  2012 was overturned and reimbursement of fines to them is underway. Blackstone connections to those with an edge in hedge funds is well known in inner circles but discussing it publically is much a taboo as anti-semitic construed remarks. FPM has made lists of associates of Blackstone principals, potentially acting-up as rogue traders - talk about "laying off risk"!

3) Blackstone and S.A.C. Have Relationship of Decade or More -
Aside of the opportunity for complicity and duplicity in a long marriage, FPM is also concerned about the quality of relations between the principals of these billionaires. We have looked into their occasional functional "meetups" like Council For Foreign Relations - CFR:...  

4) Founders of Blackstone and SAC Both Share A Jewish Heritage - 
The social or racial grouping provide both exclusivity and mutuality for operating as a cabal (a word with Hebrew origins), helping traditionally to keep the wealth within a family. The darker behavioural aspects of such ethnocentric groups are numerous and many for the report, needless to say that secrets, especially confidential business information may be passed without expectation of betrayal. The term "thick as thieves" comes to mind for this context of insider-trading rings.

5) Blackstone's Stephen Schwarzman Worked with Dennis Levine - 
Mr Schwarzman, a co-founder of Blackstone and Mr Levine as convicted insider-trader in the mid-1980s worked together as Mergers and Acquisitions bankers at Great Recession blow-up bank Lehman Brothers.

Insider trader of mid-1980s Dennis Levine (Source: "Den of Thieves" / FPM)

"Dennis was stealing my deals... It’s the most traumatizing thing that’s happened in my business career, to know that the person…in the next office, is a thief... When we started Blackstone I vowed that would never happen, and it hasn’t...” Stephen Schwarzman

From the practical experience of Milken, Levine, Siegel and Boesky era of insider-trading enforcement cira 1986, Mr Schwarzman understood the mechanism of insider trading, as well as the super easy certain investment returns, from the special relationship between deal-makers and traders, who under Glass-Stegall were prohibited from co-operation by Chinese Walls.

6) J. Tomilson Hill (Tom Hill),  Managed Dennis Levine -
Mr Hill, now head of Blackstone Alternative Asset Management - BAAM, had as then head of "Mergers and Acquisitions at Smith Barney in New York 1979 recruited, or correctly, hand picked and groomed Dennis Levine (notice the old school slivked back similarity of the two men?)

7) Dennis Levine Alleged That Tom Hill Was Insider Trading -
Mr Levine claimed J, Tomilson Hill had a secret trading account and was swapping inside information with an investment banker at Dillion, Read and trading on deals leaked by others. Levine had remonstrated  that:

"I could bring Hill down with what I know!" 

(Source: James B. Stewart, "Den of Thieves", 1991)

etc etc!
(N.B. Mr Hill and Mr Schwarzman, as far as FPM principals know, have never been formally accused of any misuse of confidential information; Mr Levine has been convicted and is unashamedly whistle-blowing)/

Among other smoke signals, the smoke from the reputation wild-fire which FPM tracks, was that FPM's check of Form 4 and 13F filings for listed Blackstone suggests an opportunity to buy into the correction before the impending market crash. Aside of the geopolitical bomb, we believe a market-led crash catalyst to be high-yield debt bust in oil and other fossil fuels, or perhaps a hedge fund blow-up - ala Long Term Capital Management - LTCM.

 Blackstone redeemed its investment just before SAC Capital was expected to be found guilty of insider trading. Any respectable organisation connected with a firm spawning a litany of insider trading advocates (see FPM's "SAC Capital's Litany of Litigation and Proceedings" from an post from xxxx), could reasonably be expected to disassociate themselves for lasting reputation sake. Especially, as they seemingly promote such ethical corporate governance values (cough cough!) – see screen-dump below explaining Blackstone’s “Guiding Principles”:

Bullshit! No, indeed they can manage this corporate perfidy?!

For disregarding the Blackstone Group's Guiding Principles, and even betraying them, as the potential fall-guy. FPM's ©NSWF:Reputation, with considered and adduced opinion, award J Tomilson Hill a Degree of "Schwarz Bullshit Artist". Indeed, James B. Stewart's epochal coverage of the insider-trading era of mid-1980s with Milken and Boesky, in "Den of Thieves" suggests that, Mr Hill sensed that Dennis Levine was in his terms, a "bullshit artist". Hence FPM's NSWF:Reputation Degree.  What goes around comes around eh!

In summary, FPM's three posters advertising FPM's ®NSWF:Reputation: 

S.E.C: “Dog Without Teeth” Degree

B.A.A.M: "Sham Sponsoring Schwarz"

J Tomilson Hill "Schwarz Bullshit Artist"

Of the person's mentioned or the protagonists of this ©NSWF:Reputation post, whom FPM are careful not to falsely accuse and slander, or in high-English “calumniate”. Bearing in mind that a) it is not slander if it is the truth and b) a reputation verdict is merely that, and everyone and everything can or does have one, even under constitutional freedom of speech laws, and c) in a context of financial services research being especially speculative in their nature. FPM's reputation enterprise is based on ‘mosaic’ research is indeed a veritable due diligence.
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Advert for ©NSWF:Reputation:

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[1] This NSWF:Reputation Degree is no way implies that Stephan A. Schwarzman, co-founder of Blackstone, is guilty by association; simply that “Schwarz”  has German etymology, from schwarz, an adjective for black)

 

Loud Report: The Organ of Calumny #1

FPM's NoSmokeWithoutFire: Of Reputation

© NSWF:Reputation

#NSWF:Reputation

Loud report issued from FPM's inception case study named after maxim that "there is no smoke without fire", in terms calumny and reputation for an entity, whether an individual or an institution. FPM's interest in the matter is to present a persistent reminder of historical wrong-doing and associated reputation of capital market operatives. The mainstream media is intent on distracting the public interest with ever-changing newsflow with public-relations dressed up reporting of corporate and white-collar criminality.
 
A multi-billion dollar hedge fund management operation in America has acquired an inaugural rating and listing in the financial community's calumny and reputation. Point72 Asset Management ("Point72") is now sidelined as an 'investment family office' dealing opaquely in the global social-eco-political order through its capital markets activities. Point72 was previously operating as SAC Capital. a renowned hedge fund operations since 1992. The exile for Point72 is suggested by its dishonourable exclusion as a money manager for public or external capital.
 
This banishment for Point72 from accepting and managing public money stems from a securities fraud crackdown started in 2007 as "Operation Perfect Hedge". SAC Capital, as it was known then, among others was implicated in illegal "systematic insider-trading". To be clear, insider-trading or insider-dealing is  basically a swapping of illicit professional secrets for mutual benefits. "Illict professional secrets" are formally known as "Material Non-public Information".

A cornerstone judgement involving former SAC Capital employees have set new legal precedents on December 9, 2014. This represents a sneaky time to announce a legal verdict against the interest of capital market integrity  and the public. A major 'hideaway'  news when most people are distracted by seasonal festivities. The United States of America's Department of Justice ("DoJ") and multi-agency regulation enforcers have turned an immense corner in making insider trading harder to prosecute, and thereby letting securities fraudsters off the hook. The precedent was set when an appeal court overturned the insider trading convictions for Newman and Chiasson). 

While the multi-billion dollars business owner, Steven A Cohen, escapes any accusation of wrongdoing or criminality, the business bearing the initials of his name, SAC Capital, settled out of court or simply reached an agreement with the US Justice system to handover more than US$ 2 billion. Some perfidious cynics in the asset management game have laughed-off the matter of multi-billion dollars legal settlement as simply "the cost of doing business". FPM counters that kind of cynicism, which creates an uneven playing field for stock market investors, and undermining of the integrity of the capital markets. We actively campaign under "NSWF-reputation" and dub the investment manager at the centre of SAC Capital as the  "The Artful Dodger" and "The Unconscionable Mr Cohen". Or loud report reputational identity:

Point72 Asset Management’s

Steven A Cohen reputation degree:

 “Disgracefully Dubious Coign”.

Note that "Coign" is a play on nomenclature of the protagonist, and with another meaning to the circumstances. The word means also a cornerstone and keystone. FPM's principals don't allege "palms being greased" between billionaires and professional regulatory enforcers for the sake of some political expediency; we simply present debate and actively campaign against perceived and actual "Corrupt Crony Capitalism at the C-Level".

SAC Capital (now renamed Point72 Asset Management) is awarded NSWF: Disgracefully Dubious Dogma degree.

The Soft-Landing ‘Global Resolution’ for Steven Cohen’s Avatars

Recent Smokescreen Stories by Main Stream Media ‘MSM Muppets’ in the SAC Capital insider trading saga:

Bloomberg June 9^th: Cohen’s Point72 Bans Instant Messaging for Some Managers
Bloomberg June 5^th: SAC’s Martoma Sentence Delayed as Defense Seeks More Time 
Bloomberg June 5^th: Story: SAC's Steven Cohen Is Still Defiant, Possibly Humbler
Bloomberg June 4^th: Steve Cohen Misses His Chats With Corporate Insiders

FPM reveals the artifice in the current episode of the SAC-saga, as contrived by Steven A Cohen's defence attorneys at SAC Capital and peddled by his spokesman Jonathan Gasthalter at Sard Verbinnen and Co. Oh, and with the pandering financial mainstream media in tow!

In cyclical convergence of hedge funds with mutual funds, Mr Cohen should know that employing a public relations company in non-transparent world should bring about new alternative media explosion. And not all reputation or hype is good - right or wrong! "Garsthalter Gas" has managed to sound the reputation clarion about "Stevie" and his  "insider trading buddies" - so SAC-Saga is not quietly going away.
 
SAC is now renamed to 72Point Asset Management and with new makeover into a "hedge fund family office", and its principal Mr Cohen is awaiting debarment from securities industry for running an insider trading racquet and pleading guilty on on 4 counts of securities fraud.  Rather than being informatively to the point, the above listed smokescreen stories are primarily designed to distract and detract from the main embedded and often hidden agenda. FPM is incensed enough to aim to set the record straight. 

A Soft-Landing Pay-off for  Steven Cohen’s Avatars Steinberg and Martoma is the obfuscated real story and our alternative headline. If court proceedings is indeed a soft landing we expect Mr Cohen won't be barred from the securities industry. Without the good old fashioned ‘U.S. Justice For Sale to Billionaires’ plutocracy, the court case should now be culminating into a proverbial spectacular car-crash scene for the ‘perps’– i.e. Mr Martoma and Mr Steinberg finally co-operating towards criminally indicting kingpin Mr Cohen.  Testimony or co-operating witness plea against Mr Cohen in exchange for a reduced sentence especially in Mr Martoma's case should still be possible, as he is still awaits sentencing according to legal professionals. A car crash scene for the insider trading perpetrators and web-of-securities-fraud Mr Cohen was anticipated. An epic car crash serving to appease higher social values of financial integrity, securities enforcement justice and the wider public interest benefits. These virtuous values should still matter even for appearance sake! 

The pending criminal court proceedings against former SAC portfolio managers  Mr Steinberg (appealing his conviction and sentencing) and Mr Martoma (awaiting his postponed sentence hearing) are simply playing out the ‘global resolution’ of the July announced criminal indictment against SAC Capital (United States v. S.A.C. Capital Advisors, L.P., et al., 13 Cr. 541 (LTS)).

 A guilty plea and a record dollar settlement of US$ 1.8 bn, including the US$ 616 mn civil forfeiture in earlier settlements related to the two parallel insider trading cases at SAC’s sub-funds Sigma and CR Intrinsic.  The respective criminal cases against SAC are in fact the current pending appeal cases involving Mr Steinberg when at Sigma and Mr Martoma when at CR Intrinsic.

A plea bargain by the convicted ‘perps’ in exchange for a lighter prison sentence of 5-6 years instead of the guideline 10-20 years that’s been threateningly touted as media distraction in both cases, was anticipated. As reported in FPM’s coverage “TheCalm Before The Storm: SAC Takeaways – Part 1”, not many expected a mere 3 ½ years sentence for Mr Steinberg, having being found guilty on all 5 charges. Mr Martoma's sentence hearing is postponed. We don’t believe it is a prosecution tactic to make him sweat, but rather to dramatise the judicial masquerade.

As early as September 2013, during the mentioned settlement negotiations, there must have been strong possibility of prosecution evidence leading directly toward incriminating Mr Cohen. Which we believe will become apparent in the SEC censure against Steven Cohen when it is commenced as scheduled in August.  Whether enforcement authorities are successful in banning him permanently from practicing the industry or a lap-wrist limited ban. Those civil administrative proceeding has now been re-scheduled for August this year. Watch this space!

To avert guilt and reputation damage from such a disgraceful banishment from securities investments Mr Cohen has reportedly hired the legal heavyweight David Boies, towards end of last year. What the myopic muppet reporters didn’t point out, in any certain way, the numerous class actions unfolding from the 4 counts of securities fraud guilty plea that SAC Capital has submitted to the courts. FPM are canvassing litigated stock-holder's registrar firm. Watch this space!

"If you expect to lose a case, you settle when the situation becomes dire, you try to save face by claiming that you are a responsible person doing it to avoid anyone else having to suffer, along with the formulaic 'to avoid the cost and distraction of a trial.'" Erik Gordon, a law and business professor at the University of Michigan. " Reuters, Sept 25, 2013

The unexpectedly light sentence for Mr Cohen’s oldest colleague does mean that SAC Capital's US$1.8 bn 'payoff' in early November last year was ‘global’ plea settlement. A settlement which precluded further evidence being solicited to incriminate Mr Cohen himself despite admission of guilt for the firm bearing his name in the settlement. A done deal which was speculated in preliminary plea discussions in September and agreed by November. Remember SAC was only indicted at the 11^th hour due to 5-year statute of limitations about filing charges from the date of the original stock trading incident. SAC was indicted on July 25^th that same year. Below is one of the few indications that the ‘global resolution’ of the case in fact occurred:

“A criminal defense lawyer, who did not want to be identified because he has had some involvement in the SAC Capital litigation, said he would be surprised if the hedge fund's lawyers agree to any deal short of a global settlement. He also said he would not approve of any deal that did not rule out the possibility of prosecutors subsequently charging Cohen.” Reuters Sept 25, 2013 

Further systemic-hypocrisy in financial services is showcased when Federal enforcement’s prosecution and SAC’s defence parties got together with their highly-paid attorneys, the April sworn-in SEC chairman Mary Jo White was rhetorically warning of a change towards will hold individuals accountable to securities fraud and that financial settlements should not be seen as merely a cost of doing business. We applaud Mary Jo White in her stance but in our reputation risk thesis she could just be another regulatory “bag of wind”. She has also avowed to modify a decades-old SEC practice of letting defendants settle without addressing the alleged wrongdoing. Watch this space!

“I want to be sure we are looking first at the individual conduct and working out to the entity, rather than starting with the entity as a whole and working in. It is a subtle shift, but one that could bring more individuals into enforcement cases… Redress for wrongdoing must never be seen as a cost of doing business made good by cutting a corporate check” SEC Chairman Mary Jo White in a speech at the Council of Institutional Investors conference in Chicago, Sept 26, 2013

In FPM’s fair and diligent way of exposing the vital truths in the obfuscated SAC-saga there has been one legal explanation in the press as to why SAC Capital the firm can be convicted but yet the 100% owner is able to dodge criminal prosecution. Here are the explanations of New York Times via its Dealbook section.

“…As long as prosecutors can show that SAC traders acted “on behalf of and for the benefit of” the fund when trading illegally, then a jury is permitted to impute liability to SAC itself.”  Peter Lattman of New York Times, Sept 24, 2013

“…The law of corporate liability allows the government to attribute the bad acts of employees to a company as long as the employees acted “on behalf of and for the benefit of” the company”  By Ben Protess and Alexandra Stevenson, of New York Times, February 2, 2014

The Court proceeding has been portrayed by the main-stream-media and PR via "Gasthalter’s Gas" as judiciously weighed-up and hotly litigated cases leading to fair-verdict convictions and respective penalties. Make no mistake, the preservation of the status-quo of plutocratic hedge fund billionaires is a defeat for the securities enforcement authorities towards the public interest.  It is clearly not in the public interest if capital market integrity and judicial judgement becomes a mre public relations whitewash.  An expediently lenient sentencing of Steinberg and Martoma stinks of done deal and masquerading court justice. 

We know closed-door negotiations took place as regards the conditional guilty plea payoff asserted by SAC defence attorneys. The guilty plea, US$ 1.8 bn settlement involving makeover in to a family office with new name 72Point Asset Management was no small concession by Mr Cohen. Since the done deal payoff the reality about the court proceedings is a specious court drama. The most recent episode of this drab soap is with Judge Sullivan presented as having erred in his interpretation of what legal components constitute an illegal insider trade. Really! Suggesting those previous parallel trial judgements and that of Steinberg could be vacated or re-tried. This intended cliff-hanger in Steinberg case affects Anthony Chiasson and Todd Newman judgements, which are also now pending appeals. FPM understands this is a red-herring story, as FPM principles have all been examined on CFA Code of Conduct and Ethics and none remember that to commit insider trading there must be knowledge of payment to the tipster! Legally speaking we cannot confirm it may not be a ruse.

In any case, Judge Sullivan’s case pertaining to the shared material non-public information regarding Dell and Nvidia, has no parallels with Elan and Wyeth’s drug trails case in Judge Paul Gardephe’s oversight of Mr Martoma’s criminal trial. Really, what nonsensical farce is playing out since the global deal between authorities and Mr Cohen had been consummated by the multi-billion dollar global settlement in November 2013.

The minimally covered story by the MSM financial press is the announcement of defence’s request for postponement of Mr Martoma’s sentencing hearing, originally scheduled for 10^th June, a day before Mr Cohen 58^th birthday.

When FPM searched keywords “Martoma sentence” on his scheduled trial date, there was minimal coverage of the online news about the postponement. Is it possible that New York Times DealBook site and the Stateside pink sheets “Wall Street Journal” and others are concealing the important announcement of the sentence hearing being kicked into the proverbial long grass. Only Bloomberg and its sub-division BusinessWeek seemed to be reporting at all. A wide-circulation PR announcement about the sentence hearing delay would have raised too many questions. So Mr Cohen’s PR-agent Gasthalter’s Gas and SEC spokesman may strategically have disseminated news only to selective journalists.  A conspiracy and mere journalistic incompetence are also probable explanation to the omission. A delay in court proceedings which will allow Mr Martoma to still plea bargain with prosecution for a reduced sentence or accept facing severer sentence and financial penalty. In dramatic terms, the prosecution is haranguing Mr Martoma for an un-deliberated hurried decision, by seeking a postponement only till the month-end of June. If prosecutors are involved in the stage-managed theatrics, post global settlement, then shame on the profession. The Probation Department had reportedly (see excerpt below) sent Mr Martoma’s attorneys sentencing guidelines which must have had him and his beautiful wife and three children jumping out of their skins:

“…Martoma argues federal sentencing guidelines require a term of between 5 and 6 1/2 years. He claims he’s responsible only for the bonus he received, not the entire gain by SAC… Martoma’s lawyers requested in a letter to U.S. District Judge Paul Gardephe last week that the June 10 sentencing be postponed for more than a month, citing a late report by the court’s Probation Department. The department said sentencing guidelines call for Martoma to receive between 15.7 years and 19.6 years in prison, according to a court filing by Martoma. Federal prosecutors in the office of Manhattan U.S. Attorney Preet Bharara agreed to the delay, but want it rescheduled for later this month… ” Bloomberg BusinessWeek June5th, 2014

Talk about mosaic research! That’s what understanding the public relations announcements via the pandering muppets of the mainstream financial media is like. Alternatively, ask Sherlock Holmes to understand conclusions! The reporting is tantamount to information degradation of very little added value. That’s why we had the old maxim “Don’t believe everything you read in the papers!”