As Steven Cohen nears a settlement that may put his SAC Capital Advisors LP out of business over allegations of insider trading, some of his overseas portfolio managers aren’t waiting.
Lia Forcina, who managed more than $700 million at SAC Capital out of London, this month quit to join BlueCrest Capital Management LLP, three people with knowledge of the matter said last week. At least four other portfolio managers have recently left SAC in the U.K., according to regulatory records and people familiar with their departures.
“No one has pointed fingers at anyone in London, so they can almost say they are a different business,” said Gary Goldstein, the chief executive officer of executive search firm Whitney Group LLC, as to why the London-based SAC traders may be having an easier time getting jobs than their counterparts in the U.S. “They aren’t being managed day-to-day by Steve.”
The departures are accelerating after a U.S. grand jury indicted SAC in July on allegations that the $14 billion firm engaged in unprecedented illegal trading for more than a decade, prompting clients to pull virtually all outside cash. Cohen, whose 21-year-old firm is negotiating a settlement with the government, is likely to be barred from managing other peoples’ money and pay a fine of $1.8 billion, people familiar with the matter said this month.
Jonathan Gasthalter, a spokesman for SAC at Sard Verbinnen & Co., declined to comment on settlement talks. At the time of the July 25 indictment, SAC said it never encouraged, promoted or tolerated illegal trading.
Government’s Price
SAC is accused of encouraging its traders to obtain information from company insiders while ignoring indications it was illegal. Six former SAC employees have pleaded guilty to trading on inside information, and two more are scheduled to go on trial.
SAC was charged with four counts of securities fraud and one count of wire fraud. The alleged scheme, which involved more than 20 companies and went back as far as 1999, helped reap hundreds of millions of dollars in illicit profits, the U.S. said. The government has told SAC that the longer it waits to settle, the higher the price will be, people familiar with the negotiations said this month. That’s because the closer the case gets to going to trial, the higher the government’s costs.
SAC employees have been sending out resumes to hedge-fund firms and recruiters since the indictment, hoping to land jobs next year when they expect the firm will need far fewer employees.
Sticking Around
As of Sept. 20, SAC employed 950 people globally, according to a regulatory filing, about 50 fewer than it did in April. About 400 of those employees are investment professionals, about the same as in April, according to filings. Recruiters have said they expect that most of the portfolio managers, analysts and traders will stick around until early next year when their bonuses are paid.
Most of the employees are located in SAC’s Stamford, Connecticut, headquarters. The firm had 18 partners in its London-based SAC Global Investors LLP unit at the end of 2012, according to filings. SAC also has an office in Hong Kong.
Forcina, 39, agreed to join BlueCrest this month, said the people, who asked not to be identified because her move hasn’t been publicly announced. At SAC, she was a portfolio manager based in London who traded the stocks of financial companies, the people said. Last month Alidod Shirinbekov left SAC’s London office to join London-based BlueCrest.
BlueCrest’s Expansion
BlueCrest, a $35 billion hedge-fund firm that mainly trades fixed-income, has expanded into equities this year after assets under management more than doubled since the end of 2009. Michael Platt, a former JPMorgan Chase & Co. proprietary trader, founded BlueCrest in 2000.
Johan Levavasseur also recently left SAC to join the London office of New York-based Millennium Management LLC, the $14 billion hedge-fund firm founded by Israel Englander.
SAC will start 2014 with about $9 billion, almost all of it belonging to Cohen, 57, according to a person with knowledge of the situation.
Cohen increased 2014 bonuses by 3.5 percentage points in an effort to retain employees, a person with knowledge of the matter said last month. SAC portfolio managers are typically paid an annual bonus of 15 percent to 25 percent of the profits they generate from their investments.
While most of the recent departures have been in London, some U.S.-based traders left earlier this year. David Selvers, a technology portfolio manager within SAC’s Sigma group, joined Conatus Capital Management LP, a $2.6 billion hedge-fund firm in Greenwich, Connecticut, in June.
Balyasny Asset Management LP, the $3.3 billion hedge-fund manager run by Dmitry Balyasny, has seen a pickup in resumes from SAC employees as the probe of Cohen’s firm intensified, people familiar with the matter said in August. The Chicago- based company has a structure similar to SAC’s, employing multiple teams that oversee independent portfolios. In February, it hired Justin Dodd, a former SAC employee, as a consumer portfolio manager.
