What's Eating Steve Cohen?

What's Eating Steve Cohen?
| Vanity Fair 18/3/20, 1:20 pm
BUSINESS | J U LY 2 0 1 0
WHAT’S EATING STEVE COHEN?

Is Steve Cohen the embodiment of all that’s wrong with Wall
Street—complete with $12 billion hedge fund, gigantic
Greenwich mansion, world-class art collection, litigious ex-wife,
and rumors of insider information? Or is he just a brilliant stock
forecaster with a bad back, a bad temper, and really bad P.R.?
Scoring one of only two published interviews SAC’s billionaire
C.E.O. has given in his 30-year career, Bryan Burrough digs into
Cohen’s Rain Man–like gift for reading the stock ticker, his
reputation, and his suggestion that he may just walk away from
it all.
BY BRYAN BU R RO U G H
M AY 2 4 , 2 0 1 1
https://www.vanityfair.com/news/2010/07/steve-cohen-201007 Page 1 of 27
What's Eating Steve Cohen? | Vanity Fair 18/3/20, 1:20 pm
Steve Cohen, after market close, at his desk on the trading floor of SAC Capital in
Stamford, Connecticut. P H OT O G RA P H BY A N N I E L E I B O V I T Z .
Rarely in history have so many Americans detested so few, in this case the
pin-striped bankers of Wall Street and their kissing cousins, the secretive
hedge-fund billionaires hidden within their mansions in Greenwich,
Connecticut. There is angry talk emanating from the White House of new
government controls and taxes on the financial sector. A revered investment
bank, Goldman Sachs, is under investigation and is being charged with
fraud, while federal prosecutors are busy strapping recording devices to
traders as part of a sprawling probe into alleged insider trading at Galleon
Group and other hedge funds.
That makes it a dicey time to be a man whose $12 billion hedge fund was at
one time said to trade as much as 3 percent of all the stock moved on the
New York Stock Exchange. Especially if you are dogged by ominous
whispers of insider trading and secret dealings, and are widely seen as the
ultimate target of all those federal investigators. You risk becoming a symbol
that embodies all that is wrong with high finance, as Michael Milken was the
last time Wall Street was under siege, in the late 1980s. It doesn’t help to
dwell in what reporters always call the greatest mansion in Greenwich,
Connecticut, a 30-room palace set inside a compound featuring its own
basketball court and two-hole golf course. Or that you are seen as a distant
and vaguely threatening man so private that The Wall Street Journal
likened you to Howard Hughes and Greta Garbo.
The man in question is Steve Cohen—“Stevie” to the Street—whose $6.4

billion fortune makes him the 36th-wealthiest American, according to
Forbes, and who is easily the most notorious and least-interviewed hedge-
fund billionaire of all. Yet, even before I enter his driveway, things are not
what I expected. Out here, in the northern reaches of Greenwich, beyond the
Merritt Parkway, the wooded, winding lanes are lined with enormous estates
overlooking bright-green lawns the size of football fields. Cohen’s infamous
home, its long roof glimpsed just beyond six-foot stone walls, seems
strangely close to the road; a teenager could heft a softball over those walls
and hit the front door.
At the guardhouse, a man in a polo shirt opens the electronic gate and tells
me to park “over by the yellow balloon dog.” This turns out to be a massive
piece of art—actually Balloon Dog, by Jeff Koons—set in a bed of tall tulips,
one of three enormous, colorful Koons pieces that line the driveway as it
curls around to a parking area jammed with a dozen cars and black S.U.V.’s.
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The house is certainly large, its portico seemingly the size of the Library of
Congress. From a side entrance, a young man emerges and escorts me
inside, past a guardroom lined with video screens and into a small chamber
with a high mezzanine whose shelves are packed with art books. Inside,
Cohen is waiting, and as he offers a soft handshake, it’s hard not to be
startled by the gulf between perception and reality. This is Wall Street’s
Wizard of Oz. And like Oz, the man who steps from behind the curtain is a
doughy little balding man in his mid-50s. There is no sense of power or
mystery, only the amiable, clerkish air of your cousin the actuary, in a zip-up
sweater and sneakers.
This is only the second time in Cohen’s 30-year career that an interview with
him has been published, not that anything else about our conversations this
spring suggests anything even vaguely Howard Hughesian. On this day,
Cohen is working at home due to his aching lower back, and as I take a seat
he jams a bright-blue ice pack down his jeans and wedges himself into a
wing chair, propping himself stiffly like a vertical sardine. He manages a
weak smile, acknowledging the incongruity. “What can I say?” he says. “This
is the life I lead.”
Of all the C.E.O.’s and billionaires I’ve met over the last 25 years, Cohen
comes off as the most unpretentious. Yes, there is a Jasper Johns painting in
his library for which he is rumored to have paid $110 million. Yes, there are
Picassos and Monets and Francis Bacons everywhere you turn. But vast as
the mansion is—“No one needs a house this big,” Cohen admits—it is also
home to his wife, seven children, and elderly in-laws. Cohen says he
understands outsiders’ fascination with his wealth, but he insists he doesn’t
deserve to be a symbol of anything, much less Wall Street run amok. The
events of the last six months, which thrust him into the tabloid headlines for
the first time, seem to bewilder him: the Galleon insider-trading scandal; his
ex-wife’s nasty lawsuit, claiming he was hiding money and involved in mail
and wire fraud; even the bizarre incident in which a Brooklyn Orthodox
rabbi, with supposed evidence of insider trading, allegedly tried to extort $4
million from him. “Oh yeah,” he says with a smile. “Don’t forget the rabbi.”
“I’ve had a rough six months,” he continues. “I could not understand it, what
the hell was going on. It was like a circus, a fucking circus. Well, things are
finally calming down. The press is moving on. This story will be the last
anyone reads about me for a while, I think. Because [reporters] will get sick
of me.”
Cohen, it is clear, is certainly sick of them. In fact, he says, the onslaught of

bad press, combined with the bulging disk that is causing his back pain, has
him thinking for the first time about an exit from active investing—and
sooner rather than later. What he describes sounds a bit like a midlife crisis.
When I express skepticism that he could walk away from a career as one of
the most heralded Wall Street traders of the last half-century, he leans
forward and jams a finger at me, Uncle Sam–style: “I’m telling you that,
within a year, if I don’t want to trade anymore, I won’t have to. As the firm
grows, it needs to change and evolve. I also need to do that. I’m setting
things up where the firm will be better able to leverage our ideas and be
more profitable and have more capital than if I was doing it as we have done
before. There’s a lot of other things I can do. I don’t have to sit at the desk.
Seriously, I’ve got nothing left to prove. I’ve been doing this 33 years, I’ve
been to the top of the mountain, and there’s not much there. My dream is to
liberate myself. So is that a midlife crisis? Or is it just being fucking smart? I
don’t know. But it’s exciting.”
It takes a moment to realize he is serious. Could this be? Could this be the
end of the legendary Stevie Cohen?
We’re Not in Kansas Anymore
P
eople on Wall Street trading desks speak of Cohen with awe. One
old friend has a framed photo of himself and Cohen playing golf
with Jack Nicklaus. Those from outside the financial world, he
says, inevitably see it and remark, “Wow, you know Jack Nicklaus?” Those
from Wall Street always say, “Wow, you know Stevie Cohen?”
After 20 years trading stocks in obscurity, Cohen burst onto Wall Street’s
radar at the end of the 1990s, when at the height of the technology-stock
bubble, in 1998 and 1999, he and his firm, SAC Capital, managed to post
jaw-dropping 70 percent annual returns. But Cohen’s legend was truly
cemented the following year, in 2000, when he bet against tech stocks
before they began to dive, leading to yet another 70 percent return. Not long
after, Business Week profiled Cohen—without his cooperation, as usual—in
a long cover story titled “The Most Powerful Trader on Wall Street You’ve
Never Heard Of.”
Cohen’s ascent, however, came with all manner of dark murmurs. Especially
in his early years, he and his traders were notorious for pressing Wall Street
sources for intelligence. Some competitors simply couldn’t believe his
returns were legitimate. They suggested—and these rumors have clung to
Cohen ever since—that he must have engaged in insider trading or “front-
running” (trading on advance knowledge of a competitor’s trades) or
something nefarious. The old suspicions made it easy for people to believe
the worst when a former SAC trader pleaded guilty in the Galleon insider-
trading scandal, last year. Cohen watched in dismay as his name was
dragged into the headlines, never mind that the trader hadn’t worked for
him since 2004. The New York Times took note of the knowing chatter,
terming SAC “a $13 billion pi&ntildeata.”
“When he was building SAC, people would say things about the way he made
his money that were not flattering—we heard all those rumors,” says Gary
Goldring, onetime co-C.E.O. of Spear, Leeds & Kellogg, the firm that cleared
SAC’s trades. “But let me tell you, as his clearing agent, I’ve seen all his
records, hundreds of thousands of trades, all of it, and my conclusion is
simply that the guy is an artist. He looks at a stock market in chaos and sees
order. He was just right over and over and over. I’ve sat and watched him
trade, watched him stare at his terminal in silence, and I can tell you,
without a doubt, he is the best that ever was at what he does. On the planet.”
For years that was enough. Cohen’s people never returned reporters’ phone
calls, not because he was secretive, they insist, but because SAC was private
and had no reason to court publicity. Now, however, with Washington
politicians hunting for Wall Street scalps amid regular suggestions in the
press that SAC will somehow be drawn into the Galleon scandal, Cohen has
reluctantly conceded it is finally time to emerge from his cone of silence.
“Steve has been characterized unfairly,” his general counsel, Peter A.
Nussbaum, says. “He doesn’t have two horns and a tail. We need to show the
world we are decent people doing a decent job.”
O.K., then. World, Steve Cohen. Steve Cohen, world.
Burn the Floor
E
very morning Cohen slides into the back of a black S.U.V. and is
driven to SAC’s headquarters, in neighboring Stamford, a modern,
rust-colored building Cohen had built in an office park on Long
Island Sound. About 800 people work for him; the parking lot is jam-packed
with S.U.V.’s and a few Porsches. The lobby is lined with contemporary art,
including another Koons, a huge pink heart hanging overhead. Art has
become Cohen’s passion; in the years since he started collecting, in 2000, he
has moved the art market as often as he has the stock market. Up a flight of
stairs, past a kitchenette with baskets of fruit and bottles of water, is SAC’s
trading floor. Scattered with young men in casual clothes staring into
colorful computer screens, it is a far cry from the Wall Street trading floors
of yore. There is no yelling or screaming; in fact, it is almost completely
silent. If not for an electronic scroll of stock symbols below the ceiling, it
could be a college library, maybe, or, given the ubiquitous headsets, an
airport control tower.
If any Wall Streeter knows three things about the famed SAC trading floor,
they are these: Because Cohen doesn’t like noise, the phones don’t ring—
they light up. Because he wants traders alert, the temperature is kept at a
steady 68 degrees. (Bulletin! It has now been raised to 70 degrees, in an
effort to soothe Cohen’s aching back, but just about everyone still wears the
SAC fleece sweater, in black or navy.) Then there’s “the Steve Cam,” a tiny
camera trained on his desk so that everyone knows exactly what he is up to.
At 12:30 p.m. on a sleepy Wednesday, the Steve Cam captures Cohen in his
usual position in the middle of the floor. As workplaces of Masters of the
Universe go, Cohen’s is something of a letdown. He sits at a 50-foot black
desk split into eight identical trading stations, one of a half-dozen parallel
desks that fill the room. At his station, Cohen, wearing his usual zip-up
sweater, rumpled khakis, and sneakers, leans back, jams his hands in his
pockets, and swivels back and forth in his chair. Before him are five large
computer screens. On the left-most screen are multicolored charts of
particular stocks he is watching; on the next, charts of the market. The
middle and right-most screens display a blizzard of green and red stock
symbols and their prices. The remaining screen is a black-and-white listing
of the $2 billion or so in positions he’s monitoring. Positions highlighted in
red are down.
The hush at Cohen’s station is interrupted only by any of several soft voices,
typically one of his assistant traders’, murmuring every few moments from a
tiny speaker to his right.
“Apple moving.”
“G.E. moving up.”
“The Russell up.”
“Usually they don’t do this,” Cohen says as I look on. “It’s just because you’re
here.” He manages a small grin.
Few outsiders appreciate that Cohen no longer does the bulk of SAC’s
trading. In fact, the money he personally oversees, that $2 billion, is less
than 15 percent of the firm’s capital. The rest is managed by 100 other
traders, called portfolio managers, known as “p.m.’s,” each of whom runs his
or her own independent portfolios. It is by all accounts one of Wall Street’s
most pressure-packed jobs. An SAC p.m. who suffers a cold streak does not
last long. “You kind of feel like you’re a member of the Yankees,” says a
onetime SAC analyst. “Every year you’re expected to win it all.”
Cohen breaks from our conversation every minute or two to make a stock
order. “Buy me 200,000 J&H, please,” he says; a voice from the speaker
repeats the order. Cohen’s temper, especially in his early years, was
notorious, and when I raise an eyebrow, he says, “I know, isn’t this civil? It’s
usually minus the ‘please.’ Sometimes I say, ‘May I … May I please buy … If
you’re not bothered.’” He returns to his screen. “Shell, take me up to a
million, please,” he says. (The names of the stocks Cohen mentions have
been changed here at his request.)
Any number of voices emanate from his speaker. Can anyone call?, I ask.
“Oh yeah, anyone can call me,” he says. “For anything. A soda. I’ll get them a
soda. I’m full-service.” Again the grin.
One of his portfolio managers walks over to discuss shorting a certain stock.
“Ballsy move at this point,” Cohen observes.
“I’m not big in it. Only 2 percent.”
“O.K. You go ahead. But I’m not.”
Everywhere one looks, there is a reminder of Cohen’s back pain. To one side,
there’s a cluster of Aleve bottles. A discarded ice pack lies crumpled at his
feet. To his left there’s a pink foam ball his physical therapist has told him to
roll beneath his feet as he trades. I motion to the Steve Cam, above his right
shoulder.
“Does that really work?”
“You look beautiful today,” says a voice from the speaker.
“Guess it does,” Cohen says, then turns back to his trades.
It’s All in the Cards
C
ohen grew up middle-class in the affluent Long Island suburb of
Great Neck, the third of eight children in a tight, bustling family.
His father was a garment manufacturer, whose company, Minerva
Fashions, made $7 dresses for Sears and JCPenney at a Bronx factory.
Cohen’s mother was a piano teacher. Smallish but scrappy, Cohen was a
standout soccer player and a point guard on the basketball team at Great
Neck North. By his own admission, he was a decent, if less than enthusiastic,
student. As Cohen tells it, it was during the spring of his ninth-grade year
that he discovered his first passion: poker.
“A group of us, we started playing cards at each other’s houses, all day, then
all night,” he remembers. “The stakes started at, like, a quarter, 50 cents.
Eventually we got up to 5, 10, or 20 bucks a replacement card, and by 10th
grade you could win or lose a thousand dollars in a night.” By the beginning
of 11th grade Cohen was making so much money at poker he began to
question his summer job as a $1.85-an-hour “fruit boy” at the Bohack
supermarket. “I was making $500 to a thousand most nights,” he recalls, “so
I said, ‘What am I doing this for?’ And so I decided to quit and just played
cards.”
All that summer, and later on weekends, Cohen would drag himself home
many mornings at dawn, toss a wad of hundred-dollar bills on a table, hand
his father his car keys, and head to bed. Poker, for Cohen at least, was never
about the money. What appealed to him was the adrenaline, the
competition, the weighing of risks and probabilities. “I’ve always been de-
sensitized to money,” he admits. “It was just always there. You know? I
didn’t think about it.” He pauses a moment. “Not really.”
“It’s the same with trading,” he goes on. “I think about the risk. I think about
the trade. I don’t think about the money. Poker—that was the biggest
determinant in my learning to take risks.”
A
t the University of Pennsylvania, as Cohen tells it, he did far better
at the poker table than in the classroom. “I was dead on arrival at
Penn,” he says with a sigh. “All these prep-school kids, they were
ready, they had read all the books. Me, well, it was a real struggle.” At the
Zeta Beta Tau fraternity house, Cohen continued his practice of fleecing his
pals at cards, though as his reputation grew he found he needed to work
hard to attract players. “If you just play with great players,” he says with a
weak smile, “no one makes any money. You’ve got to find players who, well,
maybe aren’t so great.”
It was during his freshman year, tired of attending classes, that Cohen began
spending entire days in downtown Philadelphia, outside a Merrill Lynch
office, watching the green digital numbers of the New York Stock Exchange
glide by in the window. There is a scene in the movie A Beautiful Mind in
which Russell Crowe’s character, a mathematical genius, scans an immense
wall of numbers with great intensity until eventually some of the numbers
begin to flash in his mind, one or two at a time, then strings of them—a
Hollywood way of demonstrating how a gifted mind can recognize
underlying patterns in numbers. What Cohen describes doing outside that
Merrill Lynch window sounds like much the same thing.
“I’d just stand there and stare,” he remembers. “I could hear the tick tick tick
of the tape, and you would watch a stock go by at, say, 50 … 50 … 50 … 50 …
And then it might go up or down a tick. You could see the trade happening.
You could just watch it happen in slow motion. And later, not right away, I
found I was pretty good at guessing which way those numbers would go.”
In time the Merrill brokers noticed the college kid on the sidewalk, invited
him inside, and answered his pesky questions about how the stock market
worked. Cohen began visiting brokerage offices almost every day and
investing his poker winnings, a few thousand dollars, on the brokers’ tips. “I
did lousy,” he admits. “I made all the usual mistakes. So I stopped using
those guys’ tips and started using my own skills. I was trying to develop my
own style.”
Cohen would become what Wall Streeters call a “tape reader,” perhaps the
greatest of his generation, a trader who bets on stocks based on his intuitive
reading of the movements of numbers. It’s a trading style known to some
older Wall Streeters, but one that has fallen out of favor in recent decades in
the face of computer-driven trading and analysis. From the beginning,
Cohen never used mathematics or complicated algorithms, or, at least in his
early years, any serious study of a company’s business fundamentals.
“There’s kind of an art to reading the tape,” he says. “I can’t really explain it;
it’s about pattern recognition.” When he began trading, “I’m not looking at
anything. Just the numbers on the screen. I couldn’t even tell you what the
company did, and I don’t care. I’ve always been intuitive like that. It was
always seat-of-the-pants.” He shrugs. “I mean, I’m not exactly classically
trained.”
In 1978, Cohen graduated from college six months early to take a job offered
by a friend of a friend at Gruntal & Co., a sleepy century-old brokerage
whose trading floor occupied the 14th floor at 14 Wall Street. Cohen’s first
job was in option arbitrage, which involved wrapping a single trade in so
many hedges it was practically risk-free. It was boring. Studying tape all day,
then going over it again every evening when the other brokers went home,
Cohen played stocks on the side, and after a year or so realized he was
getting good at it. “It occurred to me that I was more right than wrong on
the direction of stocks,” he says. “So I thought, Why hedge them? Why not
just buy stocks?” His bosses, looking at his returns, agreed to let him try.
“During college he would call me during class breaks, at lunch, and do a

trade or two,” remembers Ron Aizer, Cohen’s broker, who hired and then
supervised him at Gruntal. “He wasn’t a Goldman Sachs type. He wasn’t
enamored of that prestige. I remember his very first day he made $10,000.
He was far more advanced than other people his age. He started playing
bigger and bigger as he evolved. I was the one who used to allocate the
securities each guy could trade, and I’ll give you the classic line Steve gave
me when, you know, I wouldn’t let him trade IBM or some other stock. He
said to me, ‘Would you bat Mickey Mantle seventh?’ So I said, ‘I guess not,’
and changed the rules.”
H
e proved an overnight sensation. It was 1979 and stocks were
heading into the greatest bull market of the century. That first
year, trading on his own, he nearly doubled his portfolio. Gruntal
let traders keep 60 percent of what they made. After taking home $100,000
that first year, he cleared a million dollars in income the second. By his mid-
20s he was getting around $5 million in a so-so year, $10 million in a good
one. “I think they all looked at me as some kind of wunderkind,” he says. “It
all happened so fast.”
Cohen’s style of trading, based on minute-by-minute fluctuations of the

tape, was necessarily frantic. He would jump in and out of dozens,
sometimes hundreds, of stocks each day. “He was especially strong on
closings,” Aizer recalls. “We used to end every day flat, with no trades out
there, but Steve felt that if the market closed strong it would open strong,
and he wanted to carry those trades overnight. So we let him, and he made a
lot of money that way.”
Cohen began assembling a group of assistants. He sat among them on the

Gruntal floor, intently studying his Quotron—the forerunner of today’s
Bloomberg terminals—and barking out trades. It was a slow, antiquated
system by today’s standards, fraught with human error, and Cohen quickly
became known for the volcanic temper he displayed when anything went
wrong. “People say they’ve never been spoken to the way I spoke to them on
the phone,” he says with a shrug.
For a decade Cohen quietly thrived on the Gruntal floor. In 1985 the firm
made him a proprietary trader with his own division. He threw everything
he had into the job, and his marriage suffered. At 23 he had wed his wife,
Patricia, who had grown up working-class in upper Manhattan, and had two
children with her. They divorced in 1988. Cohen, by his own admission,
went into an emotional tailspin and ended up on Prozac. “Hey, I was
depressed,” he says today. “I felt like a failure.”
Lonely in his Upper East Side bachelor pad, he dialed a dating service called
People Resources. At its office, Cohen leafed through a group of binders
featuring similarly lonely women, mailed out date invitations to 20—and
had exactly one response. They met at Sfuzzi, on 65th Street. At one point
during our conversation, his date, Alex, now Cohen’s wife of 18 years,
wanders into the room. A pretty, petite woman of Puerto Rican heritage—
she was born in Harlem and raised in Washington Heights—Alex is wearing
jeans and a gray T-shirt.
“We didn’t even eat. We just talked for hours,” she recalls. “I knew he was
the one that first night. I remember I went home and told everyone that I
just met the man I’m going to marry.” Cohen took some convincing—the
divorce still stung—but when Alex gave him a deadline, he caved in and
proposed. “She’s tough,” Cohen says with a smile. “My wife, she’s tough.”
The couple now have four daughters together.
It was during this same period, in 1991, that Cohen began growing restless at
Gruntal. Senior executives limited his capital to $50 million, and Cohen, 35
by then, wanted more. Gruntal simply didn’t have the money to give. When
a former assistant applied for a job at something called a hedge fund, one of
its executives called Cohen for a background check. They fell into a long
conversation.
“I told him, ‘I feel like I’ve kind of maxed out at Gruntal,’” Cohen
remembers. “‘Tell me about this hedge-fund thing.’”
Bull Riding
B
ack then Cohen didn’t know a hedge fund from a hedgehog; he just
knew he wanted to leave Gruntal and open his own shop. “People
thought I was crazy—you know, ‘What are you doing?’” Cohen
recalls. “I wasn’t nervous. I was ready. I should’ve done it years earlier.”
He started with $25 million, roughly half of it his own money, the rest from
friends who knew his trading record. He rented space on the 23rd floor of 14
Wall, 9 floors above the Gruntal trading floor. He took along several
assistants, hired a few more, and in August 1992 began trading at a desk
shaped liked a capital I, with himself in the middle, barking out trade orders
just as he always had.
Part of Cohen’s success has always been good timing. He started on Wall
Street at the beginning of the 1980s bull market and, while he didn’t know it
at the time, he set up his hedge fund at the beginning of an even greater bull
market. In his first month at SAC he made a 3.4 percent return, 17 percent
by year’s end. In 1993 his investors saw a whopping 51 percent return on
their money. To those few who knew of him, Cohen’s 50 percent cut was
eye-opening; other hedge funds took only 20 percent. Cohen says he actually
thought 50 percent was on the small side, given his 60 percent take at
Gruntal. “I actually had to take a pay cut to start a hedge fund,” he says.
Given his returns, though, no one was complaining. All through the 90s the
market soared. Cohen rode the wave. Investors flocked to put their money
into SAC; by 1995 its assets had almost quadrupled. “I used to say, in the
90s, all you had to do was show up,” Cohen recalls. “I didn’t know how long
it would last. I didn’t care. I wasn’t thinking. I mean, what the fuck? It was a
bull market. You were bailed out of every mistake. You just shut up and play
the game.”
His first major expansion came after only two years, when he moved SAC
into a building at the corner of Madison Avenue and 53rd. While never
giving up his zeal for tape reading, Cohen had begun studying individual
companies in earnest in the 1980s, and in time had become an information
junkie, gathering tips and suggestions from a wide network of Wall Street
sources. Now he hired his first two “quants,” who introduced SAC to
computerized trading, along with his first true portfolio managers, traders to
whom he gave money to invest on their own. Soon he hired analysts for each
major industry. “It was all a way of hearing more ideas, stuff to trade on,” he
says.
This was merely a prelude. Riding the rocket of technology stocks, SAC’s
growth exploded during the second half of the 1990s—its returns, its size, its
reputation. Cohen became renowned in trading circles as a voracious
gatherer of market information. All sorts of people—analysts, investors,
other traders—called in, and not out of altruism. SAC traded extraordinarily
high volumes of stock; by decade’s end the firm, though still dwarfed by the
largest hedge funds, was trading 20 million shares of stock a day. By 2000,
Cohen was, by some estimates, doling out as much as $150 million a year in
commissions to Wall Street firms, making him one of the Street’s 10 largest
customers.
A
n analyst who phoned Cohen with a tip was thus ingratiating
himself with one very lucrative customer. Before long rumors
began to float through the Street that maybe Cohen’s information
was a little too good. It was illegal, for instance, to trade on advance
knowledge of an analyst’s recommendation or another investor’s stock
purchase. More than a few on Wall Street thought that was what Cohen was
up to.
“When I first heard of him, in the mid-90s, I used to go up there and they
were just these guys in blue jeans and open collars, unusual in those days,”
recalls a Wall Streeter who compares Cohen to Galleon’s indicted chief, Raj
Rajaratnam. “They were very similar to Raj—information junkies. Nothing
wrong with that. The sense of them, and of Raj, was that they put the arm on
Wall Street. They were huge commission generators, so if your analyst was
going to downgrade General Motors, they wanted to know beforehand. So
you were getting into very gray waters, and I wasn’t comfortable with that.”
Cohen, it should be emphasized, has never been accused of front-running or

any other securities-law violation. Still, those and even darker rumors
plague him to this day. “I can’t help what people say,” he says with a sigh.
“You have relationships on Wall Street. It’s important to keep those intact. If
you were going to front-run, they’d figure it out. We went out of our way to
be good partners.”
At the height of his investing success in the late 1990s, these murmurs
stayed in the background, in part because Cohen remained unknown outside
the trading world, but mostly because of his astounding returns. In 1999, as
the tech-stock bubble was inflating, SAC’s largest fund posted a 69.7 percent
return. After his performance in 2000, all anyone on Wall Street trading
desks was talking about was Stevie Cohen. Money poured into SAC. Cohen
moved the firm to a set of offices in Stamford, then built his new
headquarters in 2002. The firm expanded madly for the next five years, until
everything suddenly went to hell.
Trading Places
I
nside the trading community is a caste system. Generally speaking, the
longer the trade, the more prestigious the trader. Hence buy-and-hold
traders such as Warren Buffett are held in highest esteem; they are not
traders but “investors.” The great mass of Wall Street traders, those who toil
on trading floors, fall into a great amorphous middle class. The lowest
classes, few would contest, are occupied by short-term traders, personified,
perhaps unfairly, by all those sweaty “day traders” sitting in suburban
brokerages.
Which was part of Cohen’s problem from the moment he got noticed, in the
late 1990s. To the titans of the hedge-fund world, the George Soroses and
Julian Robertsons and Michael Steinhardts, Cohen was little more than a
glorified day trader, a bridge-and-tunnel kid chasing fractions of points. He

had no global insights, no “investment strategy” other than his gut. He
didn’t even go to Davos, the annual economic summit in Switzerland. At the
same time, that initial burst of publicity brought with it a smattering of
controversies, all of which appeared to reinforce the idea that he was
somehow cutting corners. An SAC trader was investigated for trading in
advance of an analyst’s stock downgrading; he was never charged. A biotech
company sued SAC, alleging it had illegally driven down the price of its
stock. A judge dismissed the suit years later, but only after 60 Minutes had
given the biotech’s company’s charges a full airing.
Cohen lets out an audible sigh when the matter of his image is brought up.
“Wall Street develops these myths about people, a persona, and things stick,
even if you change,” he says, displaying a rare flash of consternation. “I
mean, they still call me ‘Stevie,’ and I’m 54 years old. It drives my wife
crazy.” He’s right, in a way. After all, it’s hard to imagine anyone calling
Soros “Georgie.”
The move into the Greenwich mansion in 2002—after four years of

nightmarish renovation—and his newfound interest in art only emboldened
the doubters. It all seemed so stereotypically nouveau riche, the kid from
Gruntal showing off. Cohen recalls that he almost didn’t buy the house. Alex
had seen it and wanted it. Unfortunately, so did another hedge-funder.
Cohen dreaded a bidding war: “So I called the guy and said, ‘Look, we’re just
going to blow each other up. Let’s just flip a coin.’ He’s like, ‘Great idea—let’s
do it.’ So then he calls back and says, ‘I can’t. My wife won’t let me do it.’ So
at that point I had the seller and his lawyer come to my office, and I said, ‘No
one leaves until I get this house.’” And he did.
A
t SAC, he was just as decisive. As a manager, Cohen is a classic
“shit stirrer”—that is, an executive who believes constant change
keeps his firm hopping. “I remember in January 2001, right after
our best year ever, we had this management meeting, and Steve was
pounding the table, going, ‘We got nothing! We suck! We have to tear this
place down!’” recalls the general counsel, Peter Nussbaum. “The next
January it was the same thing. Every January he’s the same. One year I
finally said, ‘Steve, why don’t we just smoke what we got?’ But no. He’s just
never been very impressed by what we’ve done.”
“Steve doesn’t really understand his own persona, this iconic status he has,”
says Thomas Conheeney, SAC’s president. “We try to get him to go talk to
these business groups, and he goes, ‘Why would they want to hear anything I
have to say?’”
Cohen’s new fame was nearing its height in 2003 when, out of nowhere, he
noticed numbness in his right foot. Next he experienced a strange tingling in
his fingers. A doctor recommended an M.R.I., which showed that Cohen had
a bulging disk; two vertebrae were compressing his spinal nerves, causing
sciatica. His own doctors suggested surgery, but Cohen begged off, hoping it
would go away. It didn’t. By August he was stricken with searing pains in his
neck and shoulders. He finally agreed to the surgery.
They operated at Manhattan’s Hospital for Special Surgery that September.

The procedure itself was a success, eventually relieving almost all of Cohen’s
symptoms. The problem was the medication he received. “The night after
the surgery, I was in a lot of pain,” Cohen remembers, shaking his head.
“They were giving me painkillers. Then they gave me some more, and I
stopped breathing. I had a private nurse there, and she caught it. I woke up
in this big oxygen tent. It was very scary. It was pretty freaky.”
Many people go through life changes after such a near-death experience,

and Cohen’s wife, Alex, noticed them in her husband. “That was a terrible
experience,” she says. “I think we both came out of that thinking, ‘Small
things just don’t matter anymore.’ He spent more time thinking about the
family, more time with the kids. He started playing more golf, I know that.
He got a little more mellow.”
“Nah, that’s bullshit,” Cohen says when his wife is out of hearing range. “I’m
still capable, like any football or baseball coach, of losing my temper, but I’m
just a lot calmer than I was 10 or 20 years ago. I don’t think people change
too much. Maybe a little around the edges. You grow up, maybe just get a
little more mature.”
Cohen’s return to work coincided with what became a wholesale re-

invention of SAC. It was a time when many of SAC’s hedge-fund
competitors, such as Fortress and Citadel, were using billions of new
investor money to vigorously expand their businesses, hiring hundreds of
young analysts and branching into all manner of investments, from
Argentinean bonds to Cambodian pipeline projects.
At first Cohen resisted change. What he knew was stocks. Anything else—
bonds, credit-default swaps, C.D.O.’s—made him uneasy. But he plunged in
anyway. “We thought, We were good at [stocks]—we’ll do other things, too,”
Cohen says. “We started getting into businesses that, in retrospect, frankly,
we didn’t understand. But I was worried that other firms were growing very
fast, and I thought we needed to grow, too. Not to be a new Goldman Sachs.
But it would be hard to attract people to the firm if we didn’t do all this
stuff.”
The first major expansion was a division called Intrinsic, which was
designed for longer-term investing—“more traditional hedge-fund stuff,” in
Cohen’s words. He eventually hired 30 full-time analysts and gave them $2
billion in fund capital to manage. A second project, called Multistrat, raised
$3 billion or so to invest in credit, private equity, and other areas that were
new to SAC. Many on Wall Street believed Cohen, like his competitors at
Fortress and other big funds, was dressing up the firm as a prelude to going
public.
“I didn’t even know a hedge fund could go public until Fortress did it,” he
says today. “But, yeah, some investment bankers came to me in ‘07 and
showed me their numbers. They said we could be valued at $20 billion if we
went public. Twenty billion. I’m going, What? I’m looking left and right up
and down the trading room, going, ‘There’s no way. No way.’ But I didn’t
know. I started thinking, Maybe I will go public. Then I talked to the C.E.O.’s
of several major investment banks, who said, ‘Are you nuts? Do you realize
how painful it is to be public?’ Anyway, we looked at it pretty hard, but then
the market fell apart, and that was that.”
By mid-2007, Cohen, unlike many of his competitors, sensed the carnage to

come from the collapse of the real-estate bubble and began manically selling
off stocks and re-structuring his portfolios. He reduced the capital of
Intrinsic and stripped Multistrat of almost all the at-risk bonds and swaps it
had invested in. “When the shit hit the fan, we had to reduce our exposure.
We had to exit from almost everything,” Cohen says. “If we hadn’t made that
move, we’d have had a problem. We still got hit by the market crisis. We got
stuck in some positions that we couldn’t get rid of. Argentine bonds, stuff
like that. But we were lucky. We got out of that stuff at the right time.
Otherwise we could’ve been crushed.”
SAC experienced the first down year of Cohen’s career in 2008, off 18
percent, but it emerged from the credit crisis in better shape than many
competitors. It was at that point, Cohen realized, that he had to get back to
basics. “My dad had a saying, ‘Shoemakers make shoes,’” he says. Today
SAC is back to making shoes, i.e., investing mainly in stocks. “We’re back to
where we were in 2003,” Cohen goes on. “I wouldn’t call it perfect. I mean,
the world fell apart. Lehman, Goldman, Fannie Mae—this was a once-in-50-
years phenomenon. Everything you thought was true wasn’t true. These
rocks, these pillars of the industry, were not. The world imploded. We made
the right decisions. We made money last year. We’re a survivor.”
The New Math
S
till, he acknowledges, his best days as a trader are probably behind
him because enormous returns were easier to attain when SAC was
working off a smaller base. “We’re not going to generate those
larger numbers now that we are bigger,” Cohen admits. “We’re a mature
business in a mature industry. When I was generating those big returns, you
know, it was ‘What’s a hedge fund?’ We were so much smaller. Now we’re
bigger. Math applies. Having said that, I can make a nice living here, which
is not a bad place to be in life.”
The last 12 months, however, did not bring the relief Cohen had hoped for.
Having weathered the credit crisis, he felt like a shipwreck survivor washing
up on a distant beach—only to look up and see angry militiamen pointing
machine guns at his head. Cohen says he understands that Americans are
angry at Wall Street. He just doesn’t understand why they’re mad at him. I
ask if he realizes he is viewed by some as the personification of the evil
Connecticut hedge-funder.
“I’ve never had anyone say it like that,” he says with a smile, “but O.K. I
understand it. But I’m just somebody running a business. I shouldn’t be
castigated for it. I shouldn’t be pigeonholed by this attention, that one size
fits all, and we’re all evil. I just run a business. That’s all. If I was a mutual
fund instead of a hedge fund, no one would even know my name.”
He heaves a sigh. “Everyone gets lumped in together. No hedge fund caused

a problem in 2008. Not one. The problems were generated by banks going
overboard, and housing prices, risky lending practices. The public is going to
be pissed, and I understand that. People lost their jobs. People should be
angry. I am, too.”
The public’s fury was a painful if abstract notion at first. But it was Cohen’s
bad luck that, unlike competitors who avoided press notice as outrage grew,
he found himself being dragged into the tabloids. The New York Post picked
up Cohen’s scent last December when, after 20 years apart, his ex-wife,
Patricia, sued for more money, charging that Cohen had hidden assets from
her. A stream of embarrassing tidbits erupted from the litigation, probably

the worst being Cohen’s deposition in a 1986 insider-trading probe; he took
the Fifth and was never charged. The coverage trickled on until Patricia told
her story to New York magazine. It’s about the only thing Cohen won’t
discuss, but it’s clear he’s steaming mad.
S
till, nothing—not congressional hearings, not angry ex-wives, not
indicted rabbis—gets under Cohen’s skin the way the Galleon
scandal has. On its face, Cohen has nothing to do with it. While the
one former SAC trader has pleaded guilty to securities fraud and insider
trading and is cooperating with the S.E.C., yet another has been subpoenaed
for his role. But Galleon, under Raj Rajaratnam, was an information-driven
hedge fund with notable similarities to SAC, and The Wall Street Journal,
for one, has run a series of stories suggesting the Securities and Exchange
Commission has Cohen in its sights.
“The press has gone out of its way to include me and my firm in these
articles,” Cohen says, fairly simmering. “I’m actually shocked by the liberties
that certain reporters and newspapers have taken. But look, it’s a moment in
time. The Galleon thing is shocking. If it’s true, some of the things they did—
paying people off—are ridiculous. I look at my firm, and I don’t see any of
that. In some respects I feel like Don Quixote fighting windmills. There’s a
perception, and I’m trying to fight that perception. I find it offensive that
they lump SAC into these articles. I really do. The press, I mean, they don’t
understand what the hell—they don’t understand what they’re writing
about.”
Some competitors say there’s nothing surprising about investigators’

sniffing around SAC, especially if they’re interested in Cohen’s past
practices. “The Raj template is what Steve did for a living,” says one. “It was
legal insider information. They don’t want to go to jail. They’re not stupid.
But they want to get as close as possible to the line. They want to ingratiate
themselves with insiders. Raj and Steve, I’m telling you, were way, way out
there on information flow.”
One hedge-fund executive suggests that, if Cohen once played fast and loose
with information, he has since mended his ways. “I believe he cleaned up his
act there around 2006—that’s when he hired, like, 20 compliance officers
and a P.R. guy,” he says. “This could be like Butch Cassidy and the Sundance
Kid, where they went clean but the feds kept chasing them anyway. That’s
what I think. Back in the days when no one knew who Steve Cohen was, he
could lie and cheat and steal for information, and at some point he must
have said, ‘Gee … people who break the law are really stupid. I have to get
straight.’”
When I mention this idea to Cohen, he doesn’t exactly deny it. He stops just
short of saying SAC once traded on tips it shouldn’t have. “Look, we’ve
beefed up our compliance,” he says. “This was a learning process. [Back in
the 90s], you have to remember, we were smaller. Things were different
then. Before Reg. FD [an S.E.C. rule passed in 2000 requiring companies to
dispense information to all investors at the same time], information flowed
much more freely then. It was a much different environment. Today, I’ve
given my legal and compliance people complete rein.”
B
ut the drumbeat of bad press has taken its toll. In recent months,
Cohen says, he has begun delegating many of his responsibilities to
subordinates. It’s a process that gained urgency this winter when
doctors discovered his bulging disk flaring up again. “They said it’s a
compression of the spinal cord, it’s really dangerous, blah blah blah blah,”
Cohen says with a sigh. “I’ve elected not to do anything. But between all the
crazy press and this, I’ve started delegating more of the trading
responsibility to others in the firm. I’ve changed the firm multiple times,
and I’m in the process of doing it again.
“What would I do if I wasn’t trading? That’s an interesting question. From a

lifestyle perspective, it’s kind of cool. What would I do? I don’t know. I know
I wouldn’t be tethered to the desk, wouldn’t be tethered to Sunday-night

meetings. Could be I’d just have the freedom to watch a fucking movie, or
hang out with my kids.”
Or, more likely, indulge his passion for art. Since he began collecting in
2000, Cohen has quickly assembled what many regard as one of the greatest
art collections in America. Beginning with the Impressionists, he has
plunged into all areas of contemporary art, buying more than 300 paintings
to date, “close to a hundred of which would be regarded as masterpieces by
any institution,” Cohen’s art adviser, Sandy Heller, says.
Picasso, Cézanne, Monet, van Gogh, Warhol, Jeff Koons, Damien Hurst—
Cohen’s holdings, scattered throughout the mansion and SAC headquarters,
have an estimated value in the range of $1 billion. He regularly lends items
to the Metropolitan Museum of Art and European museums. His best-
known paintings include Willem de Kooning’s Woman III, painted in 1952–
53; van Gogh’s Peasant Girl in a Straw Hat (1890); and Warhol’s Turquoise
Marilyn (1964).
“I can say without any hesitation it is one of the great private art collections
in the world—by any measure,” says the noted art dealer Larry Gagosian,
who has bought and sold paintings on Cohen’s behalf. “I would put it in the
context of a collection like that of Ronald Lauder or Leon Black or David
Geffen or Eli Broad. I would put him at the highest level. Eli is someone with
a lot of range, but nobody has the range Steve Cohen has. He’ll get as excited
about going to a studio to see a $10,000 or $15,000 painting as he will a van
Gogh.”
Cohen is at pains to persuade a listener his interest in art is intellectual, not

material, that he’s not just the kid from Great Neck trying to show off. That
may be true, but one also gets the sense that he loves art because it is a
distraction, something to take his mind off the stock market. At one point,
motioning to the hundreds of art books on the shelves above us, I ask
whether Cohen has actually read them all. “Oh, come on,” he says. “There’s
no way I read all those books. Actually, you know what I did? I bought
another guy’s library. So it’s like, you know, a reference library.” Beside us,
one entire wall is taken up by a 14-foot-long Gerhard Richter painting, 256
Farben (Colors), a mass of softly colored rectangles. “It’s just a color chart,”
Cohen volunteers. “I call it my Home Depot piece.”
Today Cohen is a regular presence in Manhattan galleries. He and Alex love

spending Saturday afternoons hopscotching through Chelsea. Much of what
he buys today, like the $110 million Jasper Johns—“I paid a lot, sure, but
don’t believe what you read”—is contemporary art. His favorite painting at
the moment, he says, is a Francis Bacon, Screaming Pope, on a wall outside
his master bedroom. “It’s just a Pope,” Cohen says, “with his mouth wide
open, sitting behind these screens, screaming. It’s a bizarre picture, but I
love it.”
T
he last time I see Cohen, he is on the trading floor, slowly
swiveling his chair back toward his own screens. He is a pope of
sorts, at least in Wall Street’s eyes, and while there are things like
the Galleon scandal that make him scream, no one outside SAC hears it.
Maybe one day the S.E.C. or a U.S. attorney will drag him away from the
family photos on that desk. Maybe he will quit. But for the moment Cohen
seems at peace slumped there, gulping his Aleve, murmuring his trade
orders, performing for the Steve Cam. Despite his cranky back, despite all
the controversies, despite the fact the man could clearly use a vacation, I’m
guessing he’ll be in that chair a long time.

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What's Eating Steve Cohen? - Vanity Fair

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| Vanity Fair 18/3/20, 1:20 pm

WHAT’S EATING STEVE COHEN?

The man in question is Steve Cohen—“Stevie” to the Street—whose $6.4

A First Look at Steven

John Oliver Torches Trump

Cohen, it is clear, is certainly sick of them. In fact, he says, the onslaught of

We’re Not in Kansas Anymore

Never Heard Of.”

world we are decent people doing a decent job.”

O.K., then. World, Steve Cohen. Steve Cohen, world.

Burn the Floor

“G.E. moving up.”

“The Russell up.”

“Ballsy move at this point,” Cohen observes.

“I’m not big in it. Only 2 percent.”

“O.K. You go ahead. But I’m not.”

“Does that really work?”

“You look beautiful today,” says a voice from the speaker.

“Guess it does,” Cohen says, then turns back to his trades.

It’s All in the Cards

“During college he would call me during class breaks, at lunch, and do a

Cohen’s style of trading, based on minute-by-minute fluctuations of the

Cohen began assembling a group of assistants. He sat among them on the

Cohen, it should be emphasized, has never been accused of front-running or

glorified day trader, a bridge-and-tunnel kid chasing fractions of points. He

The move into the Greenwich mansion in 2002—after four years of

They operated at Manhattan’s Hospital for Special Surgery that September.

Many people go through life changes after such a near-death experience,

Cohen’s return to work coincided with what became a wholesale re-

By mid-2007, Cohen, unlike many of his competitors, sensed the carnage to

The New Math

He heaves a sigh. “Everyone gets lumped in together. No hedge fund caused

her. A stream of embarrassing tidbits erupted from the litigation, probably

Some competitors say there’s nothing surprising about investigators’

there on information flow.”

“What would I do if I wasn’t trading? That’s an interesting question. From a

I wouldn’t be tethered to the desk, wouldn’t be tethered to Sunday-night

Cohen is at pains to persuade a listener his interest in art is intellectual, not

Today Cohen is a regular presence in Manhattan galleries. He and Alex love

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