A high-stakes lawsuit against a Corporation member may be brought back to life after being dropped in January.
Steven Cohen P'08, a trustee of the University's highest governing body who amassed a vast fortune in hedge funds, was accused by his ex-wife Patricia Cohen in December of concealing assets at the time of their divorce in 1990. Her lawyer, Paul Batista, dropped the suit in mid-January, though Patricia Cohen announced that she would continue to pursue the suit with another lawyer, Gaytri Kachroo, who told The Herald that the case will be refiled soon.
"What is open to us now is to file a new complaint or an amended complaint," Kachroo said.
Vice president of public affairs and University relations Marisa Quinn declined to commenton the matter.
SAC Capital, the hedge fund founded by Steven Cohen after the divorce, was also named in the suit.
"As we have said from the outset, these decade-old allegations by Mr. Cohen's spouse are patently false and entirely without merit," said Jonathan Gasthalter, an SAC Capital spokesperson.
Patricia Cohen's claims come at time when the public is increasingly scrutinizing the practices of prominent hedge funds. In the suit filed by Batista, she sought $300 million.
The earlier suit went into depth describing Steven Cohen's financial gains during his career as a Wall Street trader from 1978 to 1992. The suit alleges that he had a confidential source alert him to General Electric's purchase of RCA in 1985. "Although she did not have a college degree and had no training in finance or law, Ms. Cohen questioned defendant Cohen about the legality of trading inside information," the suit stated. In New York, there is a five-year statute of limitations against insider trading charges.
Steven Cohen's representatives responded to the suit by requesting that Batista be sanctioned for bringing a frivolous suit. "There may have been a problem with the prior complaint," Kachroo said.
Batista told the New York Times last month that he dropped the suit because Patricia Cohen was not returning his phone calls. "I cannot fulfill my responsibilities with a client who doesn't speak to me," he said. He also told the Times he believed the case was strong, but that he could not move forward without the cooperation of his client.
Patricia Cohen claimed the suit was dropped without her knowledge, Kachroo said. "The former attorney withdrew his counsel and attempted to voluntarily dismiss the case," Kachroo said.
"We are not surprised that they withdrew the complaint," Gasthalter said of the earlier suit.
When asked whether Batista's move damaged her client's case, Kachroo said, "I don't think so. We're going to file an amendment anyway." She said that a new suit would have the potential to be "stronger and more accurate."
The case caused a stir in the financial community, but no further information on SAC Capital's business activities has emerged.
"I took the case because I thought she had some strong claims against Mr. Cohen and SAC Capital," Kachroo said.
Kachroo is no stranger to hedge fund scandals. She has represented Harry Markopolos, who blew the whistle on Bernard Madoff's Ponzi scheme in 2005. Securities and Exchange Commission officials infamously did not act on Markopolos' claims at the time.
"I see Mrs. Cohen as an underdog, the same way I see Harry," Kachroo said. "Mr. Cohen is a very powerful, financially capable, resourceful man. Harry Markopolos and Patricia Cohen don't have the same kind of resources."
Steven Cohen is a very wealthy man who has shied away from the public eye during his career. Forbes Magazine ranked him the 87th richest man in the world in 2009, with an estimated wealth of $5.5 billion. After his career as a trader, Cohen went into the emerging hedge fund market in 1992, founding the stalwart firm SAC Capital. SAC is incorporated in the British West Indies, but maintains trading floors in Stamford, Conn. and New York City.
Suspicions of insider training are not new to SAC. Though Mr. Cohen seldom speaks to the public, the Wall Street Journal published a feature in 2006 on his career. The paper referred to rumors about SAC's improper trading practices, noting that the firm had never been formally accused.
"If unethical behavior is not penalized, it will continue to grow," Kachroo said. Kachroo expressed the need for more oversight and regulatory efforts over the financial industry.
"There has to be enough law on the books and enough examples to send a very clear message so that they're careful as to how they conduct their business," she said.
In December, former SAC analyst Richard Choo-Beng Lee pled guilty to insider trading at the scandal-plagued hedge fund Galleon Group. Lee said he will provide information on any insider trading that occurred during his five-year tenure at SAC from 1999 to 2004. B.J. Kang, an FBI agent investigating the Galleon Group, is said to be looking into SAC with the cooperation of Lee, the Times reported in December. Kang previously looked into SAC in 2006, but did not obtain evidence sufficient for prosecution.