Steve Cohen: The Hedge-Fund King - A Revealing Documentary | FRONTLINE

Insider Trading Culture and Practices on Wall Street

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  The existence of a large network of insiders at many Wall Street hedge funds suggests a culture of privileged information and potential market manipulation.
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  "If you walked up to a typical Wall Street trader and you would say, 'Hey, is there insider trading at SAC Capital. Going on?',. After the guy falls on the floor dying of laughter, will get up and say, 'Yes.'" - Insider trading is seen as a common practice in Wall Street.
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  The legality of receiving market information before the rest of the world, based on the amount of trading commissions paid, raises questions about the line between rumors and misappropriation of information.
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  The FBI investigation into the Galleon case revealed a larger network of insiders and funds involved in corruption than initially suspected.
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  Rajat Gupta, a respected businessman and board member of major companies, was involved in insider trading by passing on confidential information about Goldman Sachs' investment from Warren Buffett to his friend, hedge fund manager Raj Rajaratnam.
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  According to the government, SAC made an estimated $275 million based on inside information, highlighting the potential profits involved in insider trading.

Steve Cohen's Trading Success and Strategies

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  Steve Cohen is widely admired for his ability to make a tremendous amount of money trading, which has earned him one of the great American fortunes almost entirely on his own steam as a trader.
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  Steve Cohen helped pioneer a new kind of hedge fund in the '90s, driven by the belief that he could make more money by going out on his own.
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  Cohen's information-driven hedge fund strategy focused on obtaining as much information as possible to gain an edge in trading stocks based on quarterly earnings announcements, highlighting the importance of having unique insights in the market.
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  Hedge fund traders rely on relationships and information to formulate trades, using personal connections to gain insights into market trends and potential opportunities.
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  "I ultimately ended up buying 100,000 shares of Amazon. 30 seconds later, I made about a half a million dollars."

Legal and Criminal Consequences of Insider Trading

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  "That Friday, we had been just working so hard getting ready to put the story out and we knew that it was going to, like, really be a game changer."
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  The feds are investigating how Cohen was able to achieve annual returns of 60%, raising questions about the legitimacy of his investment strategies.
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  "To get Khan to cooperate, an FBI agent, BJ Kang, was sent to Atherton, California, to confront her at home...After a two-hour meeting, Roomy Khan agreed to cooperate and become an informant for the FBI."
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  The Justice Department filed a criminal indictment against SAC, declaring it a "criminal enterprise" due to the pervasive insider trading found within the firm.
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  SAC Capital, under Steven Cohen's ownership, pleaded guilty to insider trading and paid a record-breaking fine of $1.8 billion, highlighting the scale and severity of the illegal activities.