Elizabeth Warren thinks the Securities and Exchange Commission’s settlement with fallen hedge fund titan Steven Cohen is a big joke.
The Democratic senator from Massachusetts ripped into the SEC for allowing the former SAC Capital chieftain to start a new hedge-fund firm just two months after he was barred from managing outside money until 2018.
Cohen’s move has made a “mockery of the SEC’s core mission to protect investors,” Warren wrote in a letter Thursday to SEC Chair Mary Jo White.
In January, Cohen agreed to a two-year ban on managing outside money to resolve allegations of insider-trading at his former firm. He didn’t admit to any wrongdoing as part of the agreement with the SEC.
After the insider trading plea, Cohen converted SAC into an $11 billion “family office,” Point 72, which mostly manages his huge personal fortune.
But within five weeks, Cohen had filed paperwork to start a new firm, called Stamford Harbor Capital, that can raise funds from other investors before his sanctions are lifted.
A spokesman for Cohen insists he isn’t skirting the settlement because — even though he owns the new firm — he won’t actually manage any of the money.
Indeed, the SEC settlement includes a provision that allows Cohen to raise outside money so long as he doesn’t have a supervisory role.
Still, Warren believes the SEC fell down on the job. She wants the agency to “put procedures in place that ensure that future settlement agreements cannot be so easily undermined,” according to her letter.