A BBC Documentary on Mohamed Al Fayed Opens the Floodgates of Allegations
Barrister Bruce Drummond KC and his legal team are representing 37 alleged victims and comparing the late Al Fayed to the likes of Jimmy Saville, Jeffrey Epstein and Harvey Weinstein.
LONDON — On Friday morning in London, barrister Bruce Drummond KC led a press conference with his legal team and with one of Mohamed Al Fayed’s alleged victims, Natacha.
Al Fayed, the colorful and controversial former owner of Harrods and the Ritz in Paris, who died last year, is the subject of a BBC documentary exposing his alleged bad behavior at the luxury retail department store.
In “Al Fayed: Predator at Harrods,” 20 women allege they were attacked by the Egyptian businessman and five women claim they were raped by him.
The lawyers are representing 37 alleged victims of Al Fayed.
“This is one of the worst cases of corporate sexual exploitation that certainly I and perhaps the world has ever seen,” said Drummond, comparing the case to having combinations of “some of the most horrific elements of cases involving Jimmy Saville, Jeffrey Epstein and Harvey Weinstein.”
“Saville because the institution [the BBC] knew about the behavior, Epstein because there was a procurement system in place to source the women and girls for abuse, Weinstein because it was a person at the very top who was abusing his power,” he added.
Harrods’ current owners, Qatar Investment Authority, said in a statement that they are “utterly appalled by the allegations of abuse perpetrated by Mohamed Al Fayed. These were the actions of an individual who was intent on abusing his power wherever he operated and we condemn them in the strongest terms. We also acknowledge that during this time as a business we failed our employees who were his victims and for this we sincerely apologize.
“The Harrods of today is a very different organization to the one owned and controlled by Al Fayed between 1985 and 2010, it is one that seeks to put the welfare of our employees at the heart of everything we do,” the investment authority added.
The luxury department store said it is prioritizing settling claims “in the quickest way possible, avoiding lengthy legal proceedings for the women involved. This process is still available for any current or former Harrods employees.”
A divisive figure at Harrods and the U.K. In general, Al Fayed inspired loyalty — and loathing — among employees, colleagues and fellow entrepreneurs.
“He loved his glamorous ladies and my boss loved working with him,” a former Harrods employee who joined after Al Fayed had left told WWD, requesting anonymity.
“Under Qatari owners everything was always very by the book. In a way, it was more toxic than any kind of monkeying around. It was ruled with an iron fist, they were very commercially driven and there’s nothing like that going on under the Qataris’ watch,” they added.
Al Fayed’s management style could, at best, be described as mercurial. He showered executives with cars, apartments on Park Lane and all-expenses-paid trips. But as quickly as they won his favor, they just as rapidly — and inexplicably — lost it.
“He loved fun and creativity. He had Richard Gere coming in to open the sales. He wanted theater,” another employee said.
On Al Fayed’s watch, female shop floor staff had to dress in black, and wear high heels and a full face of makeup. The employee entrance to the store had a large room filled with rows of illuminated mirrors so that women staffers could apply their makeup in the morning, and refresh it throughout the day.
“He would walk around the store and he would choose who was sent up to the chairman’s office. They all came off, usually, the fashion and beauty floors — and it was never women of color, older women or larger women,” claimed another employee about their time working at Harrods.
“Everybody knew — it was an open secret,” they added.
According to the documentary, Al Fayed would ask those around him to take a health test, which included a blood test to see if they were clear of any illnesses or sexually transmitted diseases or infections.
“He was a germophobe. He had a taster for his food and he had to wipe his hands with antiseptic wipes after he shook anyone’s hands,” said another employee who worked at Harrods.
Al Fayed’s allegations of sexual abuse were brought to light by Vanity Fair in 1995, ITV in 1997 and Channel 4 in 2017, but the stories never ever took off to this public scale.
The Egyptian-born tycoon sued Vanity Fair and then settled after the death of his son Dodi in the 1997 car crash that also killed Princess Diana.
In the settlement, he asked for all evidence to be discarded, according to the documentary.
FINANCIAL TIMES
-Israel has killed senior Hizbollah commanders in an air strike on the militants' stronghold in southern Beirut, raising fears of a full-blown war. Hizbollah's special operations commander, Ibrahim Aqil, was killed along with at least 10 members of the Radwan Force, an elite unit within the group. This is the most damaging blow Israel has struck against Hizbollah since its formation in the early 1980s. The Radwan Force is responsible for cross-border operations into Israel and defending southern Lebanon against a ground invasion. Striking Hizbollah's top commanders would also deal a blow to Iran, which considers the Lebanese group its main proxy and closest ally in the region.
-Steven Eisman, a managing director at Neuberger Berman, has been put on indefinite leave of absence after he criticized the destruction of Gaza. Eisman, who has been involved in the Michael Lewis book The Big Short, was involved in a graphic post on his X account, which included the Neuberger Berman logo. The post showed burning buildings and people shouting in agony, possibly due to an Israeli attack. Eisman responded to the post, saying "We are not silent. We are celebrating." He later apologized, stating he had intended to refer to Israel's attacks on Hizbollah in Lebanon. Eisman has since deleted the account involved.
-The European Central Bank (ECB) president, Christine Lagarde, has warned that the global economy is facing similar challenges as the Great Depression of the 1920s, a collapse in global trade, and the pandemic. Lagarde cited the worst pandemic since the 1920s, the worst conflict in Europe since the 1940s, and the worst energy shock since the 1970s as the reasons for these disruptions. She argued that global trade integration and technological advances have been setbacks in both eras. Lagarde emphasized that central banks are better equipped to address these structural changes than their predecessors, as pegging the currency to gold and fixed exchange rates was not robust in times of profound structural change.
-Donald Trump's chances of winning North Carolina in the November presidential election are threatened by allegations of racist comments by Republican governor candidate Mark Robinson on a pornography website. Robinson has denied making the comments and blamed his Democratic opponent Josh Stein for a leaked story. The allegations come as Trump faces criticism for being too close to the radical fringes of the Republican party, and he faces calls to distance his campaign from Laura Loomer, a far-right social media influencer, and disavow baseless claims about Haitian immigrants in Springfield, Ohio.
-Indonesia is considering a moratorium on building more hotels and nightclubs in Bali, a tropical holiday destination, due to congestion, rowdy tourists, and the conversion of paddy fields to luxury villas. The provincial government has asked the central government to suspend new commercial construction in four tourist hotspots. The timing and length of the ban are yet to be finalized. President Joko Widodo's administration is in agreement with the move, aiming to make Bali a clean destination with a good environment. The moratorium could last five to 10 years. Bali joins other tourist destinations addressing overtourism, such as Greece cracking down on short-term holiday rentals and Italy mulling a sharp rise in tourist tax.
-Constellation Energy is set to reopen the Three Mile Island nuclear plant in Pennsylvania to power Microsoft, as the tech giant seeks to meet its growing energy demand while reducing emissions. The 20-year power supply deal will see Constellation reopen Unit 1 of the facility, which was closed in 2019, marking the second such reopening in the US. The second unit, which was closed in 1979 due to a nuclear accident, will remain closed. The decision is seen as a symbol of the rebirth of nuclear power as a clean and reliable energy source.
-Boeing's defense business head, Ted Colbert, is leaving the company due to years of losses from fixed-price contracts and a space capsule debacle that left two astronauts in space. Colbert's departure marks the first change in the company's executive ranks since Ortberg took over the top job last month. Boeing's defence business reported losses in 2022, 2023, and the second quarter of 2024. The division has worked under fixed-price contracts for several large programs, which represent just 15% of revenues but have racked up nearly $14bn in charges over the past decade. The fixed-price programmes include the KC-46 refuelling tanker, T-7A Air Force training aircraft, MQ-25 refuelling drone, US president's Air Force One jet, and CST-100 Starliner spacecraft.
-Kamala Harris's surprise endorsement from Taylor Swift, the world's biggest pop star, is expected to shift the dial in Harris's favor. Swift, who previously shied away from wading into politics, wrote on Instagram that she was voting for Harris "because she fights for the rights and causes I believe need a warrior to champion them". She signed her post "childless cat lady" — a thinly veiled reference to Trump's running mate JD Vance, who had lamented that the country was being run by "childless cat ladies". Swift included a link to the website of non-profit group Vote.org for her 272 million followers to register to vote. The endorsement is expected to move the dial in Harris's favor.
NEW YORK TIMES
-North Carolina Republicans are facing anxiety due to the expansive posts of the Republican candidate for governor, Mark Robinson. The state party, which has long been tactical and disciplined, is now facing damage to years of gains. The Republican wave that swept the South in the late 20th Century, which Lyndon Johnson predicted after signing the Civil Rights Act in 1964, came relatively late to North Carolina. However, when it finally hit in 2013, Republicans controlled both the legislature and the governor's mansion for the first time since Reconstruction. Led by a group of savvy, tactically skilled state lawmakers, North Carolina Republicans set out to undo decades of center-left policy enshrined by Democrats and remake the rules of the political game in their favor.
-Vice President Kamala Harris visited Wisconsin after giving a speech in Georgia, signaling her closing campaign message would focus on the life-or-death risks of abortion bans and the argument that former President Donald J. Trump is to blame. In Madison, Wisconsin, a crowd that had been ebullient suddenly grew hushed as Harris spoke about her visit with the family of a Georgia woman who died of sepsis after waiting for over 20 hours for medical care to treat an incomplete medication abortion. Harris promised her mother that she would say her name every time. The rally was her fourth visit to Wisconsin since becoming the Democratic nominee, but it was her first in Madison, the state's capital.
-Israeli fighter jets bombed an apartment building in Beirut's southern suburbs on Friday, killing at least 14 and injuring more than 60. Lebanese officials said the attack killed at least 14 and injured more than 60. The Israeli military's chief spokesman, Rear Adm. Daniel Hagari, said the senior commander, Ibrahim Aqeel, had been killed, along with around 10 others from Hezbollah's elite Radwan unit, who were meeting underneath the residential building. Hezbollah, the powerful Lebanese militia backed by Iran, confirmed that Mr. Aqeel had been killed.
-Israel is increasing the intensity of its attacks on Hezbollah, the Lebanese militia, to force them to back down. This strategy is a significant escalation in the 11-month war between the two sides. For nearly a year, Israel and Hezbollah have fought a low-level conflict, mostly along the Israeli-Lebanese border, that has gradually gathered force without ever exploding into an all-out war. Now, Israel is attempting a riskier playbook by increasing the intensity of its attacks. Israel has sabotaged Hezbollah's communications devices, blowing up hundreds, if not thousands, of them in a widespread cyberattack. Its fighter jets have pounded southern Lebanon with rare intensity. On Friday afternoon, they struck Beirut, the Lebanese capital, for the first time since July, killing a senior Hezbollah military commander and collapsing two buildings.
-The Federal Trade Commission (FTC) has taken legal action against three of the largest pharmacy benefit managers, CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth’s Optum Rx, alleging that they favored more expensive insulin products and forced patients to pay more. The three collectively control 80% of prescriptions in the United States. Pharmacy benefit managers (P.B.M.s) are responsible for negotiating prices with drug makers, paying pharmacies, and helping decide which drugs are available and at what cost to patients. The agency has filed an administrative complaint accusing P.B.M.s of distorting competition and harming consumers.
-Sri Lanka is set to hold its first presidential election since its strongman president fled the country two years ago due to protests over an economic collapse. The country has faced issues such as defaulting on foreign debt, shortages of imported fuel and food, and a dry foreign exchange reserves. The interim government has introduced austerity measures to stabilize the economy, a condition for receiving a $3 billion bailout from the International Monetary Fund. The central issue in the election is how Sri Lanka should correct the imbalances in an economy warped by too little taxation, too many subsidies, and excessive borrowing. Opponents are attempting to paint incumbent Ranil Wickremesinghe as placing an unfair burden on the poor through increased taxation and letting off the hook the elites whose corruption and mismanagement wrecked the economy.
-A local Sheriff in eastern Kentucky has been charged with the murder of Judge Kevin Mullins, who was seen getting ready to go to lunch on the day of the shooting. Mullins was found dead from multiple gunshot wounds to the chest. Sheriff Shawn Stines, known as Mickey to the community, surrendered to the police and is now in a nearby county jail, facing a charge of first-degree murder. The violence has shaken the county, a tight-knit Appalachian community of about 21,000 people, which has been battered in recent years by the demise of the coal industry and a series of devastating floods in 2022. The violence has shaken the county, which has been battered in recent years by the demise of the coal industry and a series of devastating floods in 2022.
-A new study suggests that Earth might have had a ring 466 million years ago, as it was surrounded by a ring of debris from an asteroid. The study links an increase in impact craters during the Ordovician Period, an era before animals lived on land, to a ring made of asteroid debris that encircled our planet for millions of years. Previous research implicated a large asteroid that broke apart in the main belt between Mars and Jupiter and sent rocky shrapnel into the inner solar system, where it pelted our planet. Researchers led by Andy Tomkins, professor of Earth and planetary sciences at Monash University in Australia, envision an asteroid that passed within thousands of miles of Earth, close enough to be ripped apart by the planet's gravity. The debris from the breakup then coalesced in a ring around the Equator, a scenario that may be linked to dramatic changes in climate and biodiversity at the time.
-The Food and Drug Administration (FDA) has approved the at-home use of AstraZeneca's Nasal Flu Vaccine, allowing needle-shy individuals to have easy access to a potentially lifesaving nasal spray vaccine. The approval allows for an alternative to the annual flu shot that parents and caregivers can give to children and adults can use on their own outside of a health-care setting. The vaccine will still require a prescription and is expected to be available from an online pharmacy next fall. AstraZeneca will start a FluMist Home website, where people can fill out a questionnaire that will be reviewed by a pharmacist before the treatment is shipped to a person's home.
-A Secret Service internal review has found that the agency did not adequately prepare its local partners for a July 13 rally in Butler, Pennsylvania, where a gunman attempted to assassinate former President Donald J. Trump. The agency found that there were communication deficiencies between law enforcement personnel at the site, and line of sight issues were acknowledged but not properly mitigated. The mission assurance review identified deficiencies in advanced planning and implementation by Secret Service personnel, and the agency has among the most robust table of penalties in the federal government. The agency has been in this heightened and increasingly dynamic threat environment since July 13. The agency's acting director, Ronald L. Rowe Jr., cited several other failures, including complacency by some advance team members charged with securing the site and technological breakdowns that if better managed could have thwarted the gunman.
NEW YORK POST
-Legal experts suggest that the sex-trafficking case against Sean "Diddy" Combs could be stronger than the one against Nxivm sex cult leader Keith Raniere, who is serving over a century behind bars. Combs' case could be more damning due to the "treasure trove" of evidence against him, including videos of alleged "freak offs" showing his drugged-out victims having sex with male prostitutes as part of days-long sessions. The recordings are frequently mentioned in federal court papers made public against Combs, making them a "treasure trove of evidence that is going to be used against him," said Anthony Capozzolo, a former federal prosecutor. Combs is represented by Marc Agnifilo, the same attorney who also represented Raniere in his case accusing him of luring young women to his upstate New York cult Nxivm to turn into sex slaves.
-TikTok has hired Carl Szabo, a longtime general counsel and policy expert at NetChoice, to join its government relations department as it prepares for a lengthy legal fight against a congressional ban on the app. The Chinese-owned video sharing platform is preparing for a Supreme Court battle following President Biden's bill requiring it to be sold to a US company within nine months. This move signals TikTok's anticipation of the Supreme Court's decision, given its poor showing in the DC Circuit.
-Qualcomm has made a takeover approach to chipmaker Intel, according to the Wall Street Journal. Intel's shares closed up 3.3%, while Qualcomm was down 2.9%. Intel has been attempting to turn its business around by focusing on its chip foundry unit and artificial intelligence processors. However, its shares have plummeted in recent months as it cut jobs, suspended its dividend, and faced a high-profile board member resignation. Qualcomm recently approached Intel about a takeover, but a deal was far from certain, as even if Intel is receptive to an offer from Qualcomm, a deal of that size would attract antitrust scrutiny. To get the deal done, Qualcomm could intend to sell assets or parts of Intel to other buyers.
Cover:
-Luxury goods makers are facing a decline in demand due to the economic downturn and the stock market hitting record highs. The Roundhill S&P Global Luxury exchange-traded fund has dropped 7.2%, with companies like LVMH Moët Hennessy Louis Vuitton, Gucci-owner Kering, and Moncler struggling. The sector's sales growth is slowing, and Wall Street worries that the sluggishness will not let up. The wealthy are not alone in this issue. In China, moneyed shoppers are experiencing a severe economic malaise, but the problem is not limited to the wealthy. The pandemic in 2020 led to a surge in luxury shoppers, leading to unsustainable sales booms and fears that brands' exclusivity would be taken. As a result, luxury products now cost 50% to 100% more than in 2019, shutting out many aspirational shoppers and turning off core customers, including the truly rich.
Interview:
-Ocean Park Investments, founded by Dennis Jean-Jacques, is a value manager who has adapted Warren Buffett's advice to be greedy when others are fearful. Jean-Jacques, who launched the company in 2016, has a shortlist of industrial stocks he plans to buy or buy more of in the face of market turbulence. The Omaha Dislocation strategy, which focuses on Berkshire Hathaway CEO Buffett's long-term approach to investing and hedge fund strategies, has returned 22% in the past 18 months, compared to 13.5% for the HFRX Equity Hedge Fund Index. The strategy has been supported by gains in Super Micro Computer, GE Aerospace, and Advanced Drainage Systems. The Omaha Dislocation strategy aims to generate midteens average annual returns over the long term by outperforming during market downturns, shorting stocks when markets are frothy, and investing in 10 to 12 industrial companies.
Tech Trader:
-CEO Warren Buffett likes Sirius XM Holdings' satellite radio service, Siriusly Sinatra, which plays American standards. Berkshire Hathaway has increased its stake to 31% of the company's shares, worth around $2.6 billion. However, Buffett's enthusiasm for the service and Berkshire's investment have not helped Sirius XM shares, which are down over 50% this year. The stock is now trading at a 12-year low and looks inexpensive at about eight times this year's estimated earnings and with a 4.5% dividend yield. Jeff Wlodarczak, an analyst at Pivotal Research, believes the business is durable and should generate ample free cash flow. He suggests a 50% boost to the dividend in the fourth quarter. Sirius XM, which is over 20 years old, began as an alternative to commercial AM and FM radio with dozens of ad-free music stations and talk radio featuring stars like Howard Stern.
The Trader:
-Investors were initially uncertain after the Federal Reserve lowered interest rates, but by Thursday, stocks had rebounded, with the S&P 500 and Dow Jones Industrial Average hitting new records. The Fed's decision to make a "jumbo" rate cut of 50 basis points, half a percentage point, means that the Fed is "all in" on keeping the economy aloft. This realization is forcing investors off the sidelines, with the Magnificent Seven ETF and other tech stocks being the top picks.Tech stocks, particularly the Magnificent Seven, are seen as the easiest way to get "highly liquid exposure" to the highest-flying parts of the market. Some strategists are betting that tech can continue leading the market higher, as the NASDAQ was the only major index not to hit a record high on Thursday. With the broader economy slowing down, investors will be looking for companies that can still grow, potentially leading them back to their old favorites.
-Energy stocks are experiencing a shift in sentiment, with oil producers and refiners falling out of favor. Crude oil prices have fallen due to declining global demand for gasoline and diesel, and China's economy decelerating. The supply-demand setup for next year is even more bearish, with oil production on track to surge globally in 2025, and demand growth appears tepid. Analysts have been reducing their outlooks for oil prices, with some suggesting crude oil could fall to around $60 per barrel by the end of next year. At $60, most American producers will still make money, but they will have to slow down shareholder-friendly policies like stock buybacks. Refiners are also struggling, making less money from selling products like gasoline and diesel. On the Gulf Coast, where the bulk of US fuel is processed, margins are less than half what they were in 2023. When margins drop, refiners tend to curtail production, but there are signs that they are continuing to operate at high utilization rates, ensuring a longer period of weak margins.
Features:
-China is experiencing slower economic growth, with a significant decline in real estate value, affecting most citizens' savings. The property market is also experiencing declines, with slowdowns in retail sales, fixed asset investment, industrial production, and an increase in unemployment. The property sector, which accounts for a third of China's GDP, is unable to stabilize despite government efforts. Since Evergrande Group's 2021 debt default, the sector has been in contraction, with apartment prices expected to drop at least 30% in major cities before stabilizing. Officials have implemented measures to boost home buyer demand, including lowering mortgage borrowing costs and easing purchase restrictions. However, a small turnaround in June proved fleeting, as property buyers anticipated a fall in new home prices. The slow pace and small scale of policies have led to protests across the country.
-Tesla stock fell by 2.3% on Friday, closing at $238.25, while the S&P 500 dropped 0.2% and the Dow Jones Industrial Average added 0.1%. EV start-up VinFast Auto dropped 7.6% after reporting weaker-than-expected second-quarter numbers, but this likely didn't affect Tesla stock as VinFast is a smaller company. Mercedes shares fell 6.8% in overseas trading due to a cut in profit guidance, mainly related to weak sales in China. Tesla stock jumped along with the market as investors digested the 0.5 percentage point cut announced by the Federal Reserve Board on Wednesday. Lower rates help businesses by lowering the cost of borrowing and making cars more affordable, easing pressure to lower prices and boosting demand. Tesla sold about 831,000 cars in the first half of 2024, down about 7%. However, Tesla shares have made a remarkable comeback, up 75% from the intraday 52-week low reached in April and about 13% since the company reported weaker-than-expected second-quarter earnings in July. Thursday was the stock's first close over $240 since July, just before the earnings report.
European Trader:
-Novo Nordisk's obesity drug Wegovy has been recommended by EU regulatory authorities for treating obesity-related heart conditions. The European Medicines Agency (EMA) has also recommended the update of the EMA label for Wegovy to reduce heart failure symptoms and improve physical function. This move is seen as a significant step forward for people with obesity-related heart failure who currently have limited treatment options. The battle for market share in the obesity drug industry is ramping up, with Novo and its main rival Eli Lilly dominating the sector. Both companies have struggled to keep up with soaring demand for their drugs, which remain on FDA's drug shortage list. A recent study by Morningstar predicts that 16 new obesity drugs could launch by 2029, trimming Novo and Lilly's combined market share to about two thirds. Challengers include Roche, Viking Therapeutics, AstraZeneca, and Zealand Pharma. The EMA's backing of Novo's label update is crucial as it strengthens the case that obesity medicines can provide health benefits beyond weight-loss and expand the already huge market. Novo expects the label update to be implemented shortly and plans to resubmit to the FDA for inclusion of data from these trials in the Wegovy label in the USA in 2025.
Emerging Markets:
-No update
Commodities:
-The S&P 500 energy stocks have returned about 6% year to date, including dividends, trailing the 19% result for the broader index. Sagging oil and gas prices, concerns about too much capacity, and worries about a weakening global economy have weighed on these stocks. However, income investors can find attractive dividend yields that look pretty secure. Many energy companies have changed their tune from previous cycles, focusing more on returning capital to shareholders via buybacks and dividends. A Morningstar report on large integrated energy companies suggests that a focus on capital discipline should underpin continued strong returns on capital and allow for robust cash returns to shareholders. Alastair Syme, an analyst covering global energy firms at Citi Research, points out that a key overhang for these stocks is excess spare capacity in the system, which has resulted in sharp price declines. Crude is down 23% over the past year, and natural gas is off 9%. Spot prices for Brent and West Texas Intermediate crude were recently in the low $70s per barrel.
Streetwise:
-The Federal Reserve has cut interest rates for the first time in four years to stimulate the economy. The rate has already reduced financing for young families purchasing homes near city centers to 6.1%, down from 6.5% a month ago. The next step is expected to be a strong stock market rally, as falling rates boost company profits and reduce the appeal of bonds. However, JP Morgan warns that returns over the next decade may be low due to investors' over-investment. Additionally, BofA Securities reports that earnings growth forecasts for AI exchange-traded funds have fallen from 18% last year to 5%, slower than the broad stock market's expected earnings growth. The Fed has cut its target federal-funds rate by a half-point to a range of 4.75% to 5%, affecting short-term rates earned by savers and businesses, mortgage and credit-card rates, and longer-term bond yields. The average effective fed-funds rate is 4.6% since 1954.
‘It’s just business’: how Steve Cohen ran a hedge fund like a baseball team
Billionaire’s decision to step back from trading and focus on running Point72 underlines redemption since SAC insider trading scandal
Steve Cohen used to charter a yacht in the Mediterranean with friend and art dealer Larry Gagosian. But he never really switched off.
“We’d be in the middle of a wonderful dinner in Italy and he’d have to race back to the boat to trade,” said Gagosian, recalling how the hedge fund billionaire would have screens installed below deck to create a de facto trading floor.
“I said, Steve, I love you, and I love taking trips with you, but it’s not the most relaxing.”
However, after an investment career spanning almost half a century, Cohen, 68, announced this week he was stepping back from trading at Point72, the hedge fund he set up a decade ago, to focus on running the firm.
Point72, which manages around $35bn, rose from the ashes of an insider trading scandal at its predecessor SAC Capital that cost $1.8bn to settle, with Cohen subsequently barred for two years from managing external investors’ money.
As the firm has grown rapidly over the past few years, the relative size of Cohen’s trading book has shrunk — a letter to investors this week said it was less than 1 per cent of the firm’s overall portfolio.
“He believes his strategic guidance and intervention will have a greater impact” than his individual trading on the firm’s investment performance, the letter said.
Cohen has many other interests, ranging from ownership of his beloved New York Mets and philanthropy supporting veterans and children’s health to an art collection worth more than $1bn that includes works by Pablo Picasso, Jeff Koons and Alberto Giacometti. What distinguishes him as a collector is that he “is just as interested in seeing a new artist as going after a trophy”, said Gagosian, which is “not always the case”.
This week’s move underlines how Cohen is preparing Point72 to outlast him. The firm said he would be “taking a break from trading his own book”.
Born in 1956 and raised in Great Neck, New York, the third of seven siblings, Cohen credits playing poker at high school with teaching him “how to take risks”.
He began his investment career in 1978 trading options at brokerage Gruntal & Co before setting up SAC Capital in 1992, named after his initials.
The hedge fund industry was in its infancy and the early SAC was known for its cut and thrust atmosphere, juicy payouts for those who did well — and a disposable approach to talent.
Cohen was even known to fire people on the spot if they disappointed him, according to one person who used to work with him at SAC.
“Steve treated the business like a baseball team — if your shortstop is not performing then you trade him for someone else,” the person said. “There’s no personal relationship, it’s just business.”
Cohen surrounded himself with the top moneymakers but sitting close to him could be intimidating. He expected his employees to share his ferocious work ethic, quizzing them during Sunday meetings to prepare for market opening the following day.
“He is not an easy gentleman, he is not a wallflower,” said a second colleague from the SAC years. “He’s a very complicated individual but very smart, a very good trader and knows how to reinvent himself.”
Supporters of Cohen say his edge came from a seemingly instinctive ability to spot market patterns and, as the years rolled on, his experience.
“Whatever’s going on, he’s seen it all before . . . he has seen it and every iteration of it,” said the first person who worked with him.
From 1992 to 2013, SAC boasted annual returns of about 30 per cent, making it one of the world’s top performing hedge funds.
Investors clamoured for access, coughing up an annual management fee of roughly 3 per cent and up to an enormous 50 per cent performance fee, far higher than the industry standard “two and 20”.
Growing to manage more than $15bn at its peak, SAC’s returns seemed almost too good to be true. They were.
In 2013 a team of New York prosecutors led by US attorney Preet Bharara brought several charges against Cohen’s SAC Capital and affiliated firms. It alleged that insider trading at SAC was “substantial, pervasive and on a scale without known precedent in the hedge fund industry”.
They said numerous portfolio managers and research analysts obtained “material, non-public information” from “dozens” of listed companies and then traded on that inside information.
SAC incentivised portfolio managers or analysts that brought “high conviction” trading ideas to Cohen where they had an “edge” over the competition, the indictment said, with portfolio managers and analysts encouraged to pursue “industry contact networks” — but without effective controls to make sure they were not receiving inside information.
SAC Capital pleaded guilty in a $1.8bn settlement, the largest ever for insider trading. But prosecutors ultimately stopped short of charging Cohen — who did not admit personal fault — with criminal or civil insider trading charges, believing they did not have enough evidence.
For a time he appeared to retrench, managing his own money in Point72, which was set up as a family office.
By 2018 he had opened it up to external investors and after a difficult first year when the fund was flat, Point72 began, in Cohen’s customary baseball lingo, “hitting doubles” — gaining more than 10 per cent in every year except 2021.
Those who know him say that as the hedge fund industry has become more institutional and straight laced, Cohen has also mellowed with age.
But he still has his quirks. Ahead of one visit to the London office, the fridge was stocked with Dr Pepper, Skittles and Post-it notes warning “do not touch”, according to a person familiar with the situation, while the local team made sure the air conditioning was suitably cool for the boss.
Point72 employs 2,800 people, runs more than double the assets of SAC at its peak and marks one of the hedge fund industry’s greatest redemption stories.
In an unforgiving industry, Cohen is notable for his longevity, and regarded as a pioneer of the so-called multi-manager hedge fund approach, alongside Citadel’s Ken Griffin and Millennium Management’s Izzy Englander.
Like Pete Rose, the baseball player whose legacy was later soured by sports gambling, Cohen’s brush with the law means even the “best hitter ever” has a “little asterisk” next to his name, said one rival hedge fund manager who knows him.
But they added: “Stevie can still have another chapter.”
Cohen and Point72 declined to comment.
For Gagosian, his friend’s shift from player to coach may mean their holidays can resume.
“We stopped chartering boats together,” he said. “Maybe now we’ll do it again.”
Perplexity in talks with top brands on ads model as it challenges Google
AI search start-up develops ‘sponsored’ question system in effort to gain share of $300bn digital ads industry
Artificial intelligence-powered search engine Perplexity is in talks with brands including Nike and Marriott over its new advertising model, as the start-up mounts an ambitious effort to break Google’s stranglehold over the $300bn digital ads industry.
The San Francisco-based group is seeking to redesign the auction-based ads system pioneered by Google, where marketers bid to have a sponsored link placed against search queries.
At present, Perplexity’s AI chatbot gives a comprehensive response to user questions based on information from the internet, citing sources and including links to web pages. Below this, Perplexity offers suggested follow-up queries.
Under its new advertising model, brands will be able to bid for a “sponsored” question, which features an AI-generated answer approved by the advertiser.
Perplexity has held talks with a small number of top companies, including Nike and Marriott, according to correspondence seen by the Financial Times. The company said it hoped to roll out the ads system by the end of the year and was targeting “premium” brands. Nike and Marriott declined to comment.
Aravind Srinivas, Perplexity’s chief executive and a former Google intern, said: “Ads are really useful when they are relevant and coming from brands that are high quality, and a lot of people make purchases based on that.”
Perplexity’s effort is part of a wave of new competition faced by Google as the search business undergoes its most radical shift in more than two decades.
OpenAI’s ChatGPT also provides quick and complete answers to many questions, threatening to render redundant a traditional search engine’s list of links, and the lucrative ads that appear alongside them.
Google, which has spent billions of dollars developing generative AI, has launched an experimental AI search function and also considered offering a subscription AI search service, the FT reported in April.
Analysts suggest Google is held back by the “innovator’s dilemma” as generative AI could damage the basis of its existing search offering. However, there remains scepticism on whether the technology will seriously disrupt Google’s dominance.
Under Perplexity’s ad system, marketers will be charged on a so-called CPM basis — paying above $50 for every 1,000 impressions generated by these sponsored posts, said a person familiar with the model. This compares with an estimated $1,100 for the same number of impressions by Google, according to analysts eMarketer.
Last year, Microsoft chief Satya Nadella said its multibillion-dollar alliance with OpenAI would improve its Bing search engine, while helping to demolish the high profit margins that have underpinned Google’s core business.
But despite being one of the first big tech giants to add AI to search, Microsoft has only just started to gain more share in search advertising in the latest quarter, said Joseph Teasdale, head of tech at Enders Analysis.
Meanwhile, Google’s search business has grown 14 per cent in the three months to June, compared with the same period the year before. Search accounted for $48.5bn in revenue, more than half of parent company Alphabet’s total revenues.
“As the incumbent champion, Google has the most to lose from any shake-up,” Teasdale said. “But Google is also in the strongest position: it’s strong in AI, users trust it for search, and it controls key user surfaces like Android and Chrome that it can deploy its version of AI search on.”
The financial success of Perplexity’s new ads system depends on whether it can gain significant scale. The company says 250mn queries were made on its search engine in July, compared with 500mn in the whole of last year.
Perplexity makes money through subscriptions, charging $20 a month for its Pro service, which offers access to more advanced models and image generation. Annualised revenues — a projection of full-year revenues based on extrapolating the most recent month’s sales — have grown from $5mn in January to $35mn in August, according to the company.
Srinivas said he wanted its advertising system to become “a money-printing machine.”
“A good chunk of our traffic comes from the US and other high GDP countries, making it a good experiment . . . we want to IPO and be a successful company of our own, and there is no reason not to be.”