Following years of fights in the nation’s courts, the Securities and Exchange Commission (SEC) reached an agreement with the controversial Wall Street mogul Steven A. Cohen giving him the green light to resume the management of other people’s money in 2018.
The billionaire’s SAC Capital Advisors troubles with federal regulators started in 2013. Three years ago, the firm was fined $1.8 billion for insider trading charges. At that time, SEC was set to bar the fund manager from touching outside money for life. Though one of his associates was convicted, he was never criminally charged.
But two years ago, Cohen’s story took a different turn when an appeals court overturned the 2013 ruling. That ruling made SEC rethink its decision regarding Cohen. Recently, SEC has announced that Cohen will have to stay on the sideline just two more years.
After that time, he can return to its usual business as hedge-fund supervisor. In the meantime, SAC Capital Advisors will be closely monitored by regulators and will have to hire an independent auditor to make sure that the firm complies with SEC’s requirements.
If SEC finds anything wrong and takes legal action, the oversight period can be extended at any given moment. The agreement is designed to allow the commission have an insider look to the firm’s business, which in other conditions would have been impossible.
The head of the SEC Andrew Ceresney said that the two-year oversight period and the additional requirements are enough to ensure that the billionaire does not pose a risk to third-party investors.
Cohen could not be reached for comment.
With the legal hurdles at his back, the billionaire’s greatest challenge now is to regain trust of its former business partners by 2018. Brad Alford from the Alpha Capital Management believes that Cohen is one of the best traders there is, so making his business thrive again would be easier than thought.
“People are going to be lining up out the doors,”
Other analysts agree. Don Steinbrugge of Richmond, VA-based Agecroft Partners thinks that investors can’t wait to welcome Cohen back. Steinbrugge even expects him to make $2.5 billion on the first day he is back in business.
But there are some people that do not share the enthusiasm. Blackstone Group LP’s former top exec Stephen Morton noted that while some people will be glad that he is back, some others will not.
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