SAC Capital Pays A Guy to Play Golf All The Time
Golf and finance go together—as everyone knows.
There's something about the quiet of nature, the fresh air and sunshine—and the competition —that just seems to bring financial services types together.
And one guy, Sam Evans at Steve Cohen's SAC Capital, gets to do it virtually all day long. According to a Reuter's article published today:
"Unlike his co-workers, the hundreds of traders and analysts who work at Steven Cohen's $12 billion hedge fund, Evans does not stare at computer screens, map out stock charts or work the phones for information on the markets all day. Rather, he spends much of his time negotiating the greens—quite literally. Evans, 49, who joined Cohen's Stamford, Connecticut-based firm in August 2009 after more than 20 years as an institutional stock broker, is SAC Capital's unofficial golf pro. Evans job isn't so much helping SAC Capital portfolio managers and others at the fund with their strokes, as it is helping them gain a better understanding of some of the companies Cohen's hedge fund puts money into."
Sweet gig, right?
Evans apparently does a lot of schmoozing potential clients. But, according to the Reuters article, that's not all: "But beyond the need to raise capital, Evans' time spent on the greens also sheds a light on the many often subtle ways that hedge funds use to get access to corporate executives and a potential edge over their competitors."
If that arrangement sounds to you like it might be flirting with the line, SAC Capital may have reached a similar conclusion:
According to Reuters, "In fact, SAC Capital takes steps to make sure that even if some executive let his lips flap a bit too much while waiting to hit a putt, the fund doesn't trade on anything that is said. A former SAC Capital employee familiar with the golf outings said shares of companies whose executives attend a golf outing that Evans has either arranged or co-sponsored are put on a "restricted list" —meaning the stock can't be traded for a set period of time."
Georgetown University Law Center professor Donald Langevoort would seem likely to agree with just such restrictions: "The potential issues are fairly obvious because these are events where there is unlikely to be strong compliance control. Everybody knows in their head what the rules are. But when you go out in one of these settings it is easy to slip."
And for SAC Capital, there are some other issues that still are hanging around. In October of 2009, Raj Rajaratnam, a co-founder at Galleon Group, and about twenty of his employees were arrested on insider trading charges. The Reuters article provides the context:
"[Since the Galleon Group incident,] federal authorities have said stamping out the misuse of secret corporate information by hedge funds is a major priority. Authorities are particularly focused on the ways hedge funds gather information to get a so-called trading edge. The Galleon investigation also has caused headaches for Cohen because several people charged in the case had once worked at SAC Capital. But so far no one has been charged with wrongful trading while working at Cohen's fund."
In some way, SAC Capital has been on the leading edge of creating a culture that supports transparency and reduces the likelihood that financial misdeeds will occur. For example, as the Reuters article points out, "Cohen aggressively started adding compliance people to the payroll to make sure traders at the fund do not cross the line. Other big funds have since followed suit."
Cohen was also one of the first hedge fund managers to hire an in-house psychiatrist.
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