There was a time when so many of us longed to be part of a hedge fund. We could learn the business (not knowing too much of it was a scam) from brilliant men and women. We would develop the ability to calculate and take risks (though some of the trading involved no risk, being based on non-public information). And there was so much money to be earned. Books like "The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds" depicted the culture as a heady meritocracy.
Now, we find out about the fear-laced pressure-cooker culture of SAC Capital Advisors, based not far from me in Stamford, Connecticut. In this issue of BLOOOMBERG BUSINESS WEEK, Sheelah Kolhatkar captures that grim work setting in the article "The One Who Got Away." The one is SAC founder Steve Cohen. Here you can read the analysis.
Cohen divided employees into teams. They competed against each other. Heads of the teams like Michael Steinberg strong-armed subordinates to go out there and only come back with insider information. For that for a year one of Steinberg's employees Jon Horvath only earned $416,084 in 2007. A few years before that my younger sister Anne Murga-Ring was earning almost $200,000 in a perfectly non-competitive legal way as an administrator at a small hospital in Bayonne, New Jersey. And many media-relations representatives make much more than Horvath with less sustained stress.
Steinberg has been convicted by a jury of two counts and one charge which could get him 85 years when he is sentenced. Much of the government's case against him was put together with the cooperation of Horvath. Next week there is jury selection for another SAC team leader Mathew Martoma. When the feds first approached him on his lawn to discuss allegations of insider trading he fainted. When the jury entered the courtroom with their verdict, Steinberg fainted. Steve's men have had to pay big legal bills.
So far, Cohen has not faced criminal charges, that is the kind that get you in the slammer.
Maybe the grass is never really greener, not in any understanding of "green."