Steve Cohen, the king of hedge funds

Steve Cohen was born on June 11, 1956. He is an American director of hedge funds. He’s also the founder of SAC Capital Advisors, a hedge fund whose investments are primarily focused on equity market strategies, and it’s located in Stamford, Connecticut.

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Image courtesy of Sue Waters at Flickr.com

Cohen grew up in a family of Jewish origin in Great Neck, New York. His father was a clothing manufacturer in Manhattan’s Garment District, and his mother was a part time piano teacher. As a high school student he became fond of poker, often betting his own money in tournaments. Cohen attributed his knowledge on how to take risks to this game of cards.

Cohen obtained a degree in Economics from the Wharton School of the University of Pennsylvania in 1978. During his student years, a friend helped him open a brokerage account with $1,000 of his tuition money. After completing his studies at the Wharton School, Cohen gets a job on Wall Street as a minor operator in the arbitration department Gruntal & Co. in 1978, where he finally managed a portfolio of $75 million and six investors.

On his first day at Gruntal & Co., he made a profit of $8,000. Eventually he managed to get the company to make profits of about $100,000 per day. Cohen was still working at Gruntal in 1984, and continued to work there until he started his own company, SAC Capital Advisors. It has an estimated net worth of $9.3 billion.

In 1992, Cohen started SAC Capital Partners with 20 million dollars of his own money, and today the firm manages $14 billion in capital. Originally known as a fast-acting businessman, he never held commercial positions for long. Cohen now has a growing number of equity investments for even longer periods of time.

Cohen is one of the minority owners of the New York Mets, with a 4% stake in the baseball team.

Forbes magazine estimated the fortune of Cohen in $8.3 billion in September 2011, ranking 35th among the richest men in the United States.

In 1998, the Cohen family bought a 3.300 square-meter house in Greenwich, Connecticut.

Reportedly his 2005 compensation was of $1 billion, considerably higher than his 2004 salary ($450 million), in 2001 his compensation was $428 million, and in 2003 his compensation was $350 million.

In addition, Cohen owns 7% of the search engine Baidu and owns 5% of the company SSD OCZ Technology.

On November 20, 2012, according to The Wall Street Journal, Cohen was involved in an alleged insider trading scandal involving a former SAC manager, Mathew Martoma.

Cohen was not named directly in the indictment released in New York, but he is known as Portfolio Manager A, according to people familiar with the matter.

Reuters reported that Cohen personally signed in the operations that are being investigated, but experts said that prosecutors have no evidence that Cohen knew that the operations were based on insider information.

A SAC spokesman later said that Mr. Cohen and SAC are confident that he has acted correctly and will continue to cooperate with the government’s investigation, according to the aforementioned publication.

Five former SAC employees have been involved in operations of insider information by prosecutors, and three have confessed. Three other former SAC traders have been charged with trafficking after leaving SAC and two of them have pleaded guilty. The culture of the SAC has been described as a high-stress, high pressure and ruthless one.

In February 2013 Mr. Cohen was featured in the Forbes list as one of the 40 hedge fund managers with higher incomes.

He has been married twice. In 1979, he married New Yorker Patricia Finke, who came from a working class family and grew up in Washington Heights, Manhattan, a neighborhood of New York City. They had two children together. The couple divorced in 1990.

In 1992, he married Alexandra Garcia, a working single mother originally from Puerto Rico and Catholic also grew up in Washington Heights. They have four children together and they live in Greenwich, Connecticut with their seven children (from their previous marriages).

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Image courtesy of Ken Fields at Flickr.com

Cohen is a member of the Board of Trustees of the Brown University and the New York headquarters of the Robin Hood Foundation.

In December 2009, Steven A. Cohen and his brother Donald T. Cohen were sued by his ex-wife Patricia Cohen on charges of extortion and insider trading.

On March 30, 2011, the District Court of the United States in Lower Manhattan dismissed the case, saying that the claims of Ms. Cohen amounted to little more than speculation and rumors.

On April 3, 2013, the 2nd Circuit Court of Appeals in New York said a lower court had erred in dismissing claims based on fraud by his former spouse and revived the lawsuit.

They also revived lawsuits for extortion and breach of fiduciary duty, while the defense obtained the denial of requests for illicit enrichment.

Dubbed the king of hedge funds in 2006 by the Wall Street Journal, in 2007 an article in Time magazine ranked him in the 94th position in its annual Time 100 list of the most influential people. In 2011 he was included in position 50 among the most influential ranking of Bloomberg Markets Magazine.

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