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April 16, 2014

In Corporate Monitor, a Well-Paying Job but Unknown Results

“In the insider trading case against SAC Capital Advisors, federal prosecutors have given a particularly nice gift to a former federal prosecutor, Bart M. Schwartz. Mr. Schwartz, who is now the chairman of the consulting firm Guidepost Solutions, was appointed SAC’s independent compliance consultant and is charged with assessing the firm’s future trading practices.”

“The job is likely to earn Mr. Schwartz millions, but it will do little more than that. It’s all part of the corporate monitoring industry, a full employment act for former federal prosecutors that may have little effect on the way any company that is forced to hire a monitor conducts its business.”

“SAC Capital’s guilty plea was accepted by a federal judge last week. The firm will pay a record $1.2 billion penalty for insider trading — a $900 million fine and about $300 million in forfeited profits.”

“The hedge fund will survive — even after the guilty pleas to insider trading charges by six employees and the conviction of two others — but in diminished form. SAC Capital has already renamed itself Point72 Asset Management, making it sound strangely like a 1980s euro trash band. SAC has also left the investment advisory business, meaning it will only be managing about $9 billion, mostly the personal fortune of the firm’s founder, Steven A. Cohen.”

“Still, is this punishment sufficient? After all, it allows an enterprise that harbored extensive corruption to continue.”

“Enter Mr. Schwartz, who has a long history of serving as an independent monitor in government investigations. He is the ostensible key to ensuring that Point72 will remain on the straight and narrow.”


Read full New York Times article here.

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