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Hedge fund paying bonuses for not being a jerk

Bonus

Back in the good old days, SAC Capital paid its traders large bonuses when they made the firm massive amounts of money. In many cases, that money was earned through less-than-ethical and sometimes illegal means. Eight former SAC Capital employees have been found guilty of insider trading and the firm just paid $1.2 billion in penalties related to its, shall we say, laissez faire attitude toward compliance.

Now, as a transformed family office named Point72 Asset Management, Steven A. Cohen’s hedge fund is attempting to shove the shoe on the other foot. The firm announced to employees this week that they can earn a bonus by being ethical. Seriously.

Some managers and analysts can see as much as a 4% bump in compensation if they follow the firm’s compliance policy and ethical standards, contribute to the community and, of course, put up good numbers, according to Bloomberg.

The program, dubbed “Rewarding What Matters,” will pay out bonuses to employees if they bring concerns to the compliance department or if they suggest certain policy changes, a Point72 Asset Management spokesperson told Bloomberg. Acting like an upstanding member of society outside the office – like serving on a charitable board – can get you paid as well.

The tactic is one of many Cohen and other managers have employed to change the firm’s culture while also bettering the company’s name following years of scandal. They said goodbye to their longtime compliance chief and brought on a software maker to improve internal surveillance, among other moves.

But the bonus program is also likely aimed at limiting employee turnover that has hurt the hedge fund since it stopped trading outside money. Cohen also increased traditional bonuses last year and reportedly asked top portfolio managers to re-up their two-year contracts.

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Quote of the Day: “I must tell you though that this was no ordinary dance. She – the ex-Disco Queen – and I the young student of Arthur Murray, strutted, boogied, discoed with moves that neither of us thought we could ever do – sober or even mildly inebriated. We dipped, we twirled, I even did a bop or two. Travolta would have been proud. We were ‘Stayin’ Alive!’” – Bill Gross in his first investment letter to clients at Janus Capital

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