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Trustee's firm subpoenaed in 'soft dollar' investigations

All eyes on Wall Street have turned to Steven Cohen P'08, who serves on the Corporation, the University's highest governing body, as a member of the board of trustees.

The New York Times reported Nov. 22 that, as part of an insider trading investigation, FBI agents raided three large hedge funds. Two of them — Diamondback Capital Management and Level Global Investors — have ties to SAC Capital Advisors, a $12 billion hedge funds firm Cohen founded in 1992 and runs today.

Diamondback and Level Global Investors are managed by SAC alums, and Richard Schimel, co-founder of Diamondback, is married to Cohen's sister, the Times article reported.

Another Times article on Nov. 23 reported that SAC received a subpoena from authorities Nov. 22. Two mutual funds, Wellington Management and the Janus Capital Group, also received subpoenas on the same day.

The companies and Cohen have not been accused of wrongdoing, the Nov. 23 Times article reported.

A Nov. 27 Wall Street Journal article reported that these investigations are focused on what is known as "soft dollars" — a kind of commission which an investment manager gives to a third party for services that benefit the client. Soft dollars can go unreported.

By investigating the use of soft dollars, federal authorities may be able to understand the complicated relationships among many firms and corporations in order to expose possible illegal trading, the Journal reported.


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