We knew it was coming, we just didn’t know when and in what form. SAC Capital Advisors will soon turn from one of the most successful hedge funds of all time to a shrunken-down family office that oversees only employee money, plus the $9 billion or so hidden in the pockets of founder Steven A. Cohen.
The official transformation is set for mid-March, according to Dealbook, with a name change being only the initial part of the corporate restructuring. It comes as no real shock that Cohen will remain as chief executive, but his day-to-day responsibilities will be mitigated by a new layer of management meant to act as a buffer between the boss and his admittedly thinner cadre of traders.
Cohen is currently facing an SEC suit charging him with failing to supervise his employees, eight of whom have now been charged with insider trading. Cohen so far has evaded criminal charges and, in recent months, has reportedly morphed from a head trader to more of a corporate leader.
Part of the rebranding has taken the form of layoffs. The firm said goodbye to dozens of traders within its now defunct office, many of whom have resurfaced at Moore Capital Management, and has cut back-office employees. Three trading units will be set up and run by Phillipp Villhauer, Michael Ferrucci and Ross Garon, long-time SAC staffers, according to Bloomberg. Neither of the three will report directly to Cohen.
One thing to watch moving forward is how the yet-to-be-named spawn of SAC will be treated, both by regulators and the Street itself. Five months ago, when the first official criminal indictment came down, banking counterparties that rely on SAC’s historic trading volume offered support for the reeling hedge fund, with Goldman Sachs President Gary Cohn calling the firm “a great counterparty,” despite the insider trading charges. The tide may have turned though, especially considering SAC no longer has the same bank roll. Within the last week, longtime broker Deutsche Bank decided it will no longer work with the SAC.
The other question to be answered is what new name will the firm take? Send your suggestions to US.Editor@dice.com and we’ll publish the best of the group. We’re expecting sarcasm.
SocGen Hiring in FICC (eFinancialCareers)
SocGen is hiring for its U.S. fixed income and rates and currencies businesses. Here are a few pros and cons about working in FICC at the French bank.
Money Where His Mouth Is…Kind Of (Dealbook)
For the second year in a row, Barclays Chief Executive Antony Jenkins has turned down a cash bonus, noting the continuing restructuring issues the bank is undergoing. Bonus announcement for rank-and-file investment bankers come this Friday. Bonus payments are actually expected to be up a percentage point or two.
Sneaking By Uncle Sam (WSJ)
Private equity firms may be underpaying taxes by hundreds of millions of dollars by misrepresenting what are deductible consulting fees. PE firms are also being investigated for converting ordinary fee income into capital gains, thus further reducing their tax burden.
Exis Shuttering (WSJ)
New York hedge-fund firm Exis Capital Management is closing its doors. The firm, run by Adam Sender, was managing only $75 million, down from $1 billion earlier, and lost more than 5% in 2013. New York’s Joho Capital Management is being shuttered.
Used Car Salesman (Bloomberg)
Former Jefferies managing director Jesse Litvak’s fraud trial is set to get underway this week. Litvak is charged with misrepresenting the value mortgage-backed securities between buyer and seller and keeping the difference. One official said his dealings were unworthy of a used-car salesman.
Goldman Case Study Question (eFinancialCareers)
Want to work for Goldman Sachs? You’ll likely face a difficult case study question toward the end of the interview process. Here are two examples.
Hard to believe, but London’s financial-services center added 3,350 jobs in January. Maybe the City is back.
Buzz Around the Office
Broadway Joe (USA Today)
Former Jets quarterback Joe Namath was the talk of the Super Bowl, despite the fact that he wasn’t playing in it. Broadway Joe was decked out in an over-the-top fur coat (in 50-degree weather), then botched his role as the ceremonial coin tosser in vintage form. But at least he didn’t try to make out with the sideline reporter when he was finished.
Quote of the Day: “Hours have to be reasonable so they can have a balanced lifestyle. ... all work and no play ... become very uninteresting advisers to companies because they bring a very narrow perspective.” – Morgan Stanley CEO James Gorman