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\ 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 Burrough
July 2010

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.

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

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

People 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

Every 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

Cohen 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.”

At 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.”

He 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
Back 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.

An 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
Inside 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.

At 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

Still, 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

Still, 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

But 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.”

The 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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