Last Updated on 14 October, 2021 by Samuelsson
Steve is an American investor and the co-founder of S.A.C. Capital Advisors. He grew up in a Jewish family in Great Neck, NY. His father was a dress manufacturer in Manhattan’s garment district, and his mother a piano teacher. Steve is the third child among seven brothers and sisters.
He liked poker games during his high school years and made bets with his own money in tournaments. The game taught him how to take risks. He graduated from John L. Miller, Great Neck North High School, in 1974. He also played on the school’s soccer team.
Steve earned a degree in Economics from Wharton School at the University of Pennsylvania in 1978. While in school, he was inducted into the Zeta Beta Tau Fraternity’s Theta Chapter — he served as treasurer. A friend helped him open a brokerage account with $1k from his tuition money during that time.
After graduating from Wharton School in 1978, he got a job on Wall Street at Gruntal & Co. as a junior trader in the options and arbitrage department, where he made an $8k profit. With time, he made about $100k for the company every day and was eventually made to manage a $75 million portfolio and six traders.
He simultaneously ran his own trading group while at Gruntal & Co., starting from 1984, and continued managing it until he began his own firm, S.A.C.
In 1992, Steve founded S.A.C. Capital Advisors with $10 million initial capital from his savings and an additional $10 million from outside money. The company’s name “S.A.C. Capital” was coined from Steven A. Cohen’s initials.
In 2003, the New York Times wrote that “S.A.C. is one of the biggest hedge funds, and is known for frequent and rapid trading.” And then in 2006, The Wall Street Journal reported that although Cohen traded rapidly and never held on to his positions for a long time, he now holds an increased number of positions for much longer. As of 2009, the S.A.C. had about $14 billion in assets under management.
Throughout the late ’80s, the S.E.C. became suspicious that Steve used insider information to trade. He was investigated when he betted that R.C.A. and G.E. would merge ahead of the announcement. The S.E.C. called him to testify by the Securities and Exchange Commission, but he refused to answer their questions, stating his rights against self-incrimination.
From then on, the S.E.C. started keeping a close watch on some of his other investments, especially those that involved Brett K. Lurie. On November 20th, 2012, He was implicated in a suspected insider trading scandal involving a former S.A.C. manager, Mathew Martins. The S.E.C. also charged other employees of the firm from 2010 to 2013 with different consequences. Martins was found guilty in 2014 in what federal prosecutors referred to as the most successful insider trading conspiracy in history. They agreed to pay $1.8 billion in fines. However, Steve was prohibited from managing outside money for two years as part of the settlement agreed upon in the civil case over his accountability for the scandal.
Steve has donated $715 million to philanthropic causes throughout his life, including charitable causes relating to children and veteran’s health.
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