While regulators who continue to focus on insider trading seem to be closing in on SAC Capital owner Steven A. Cohen, the embattled hedge fund billionaire probably didn’t expect to face another new uphill battle in the form of a vengeful ex-wife.
On Wednesday, a federal appeals court revived a lawsuit that Patricia Cohen, Cohen’s ex-wife, had filed against him. Patricia Cohen’s lawsuit, filed in 2009, accused her former husband of hiding millions of dollars in assets at the time of their divorce more than 25 years ago. The lawsuit reportedly also claimed that Cohen’s hedge fund was a “racketeering scheme” that engaged in insider trading and other crimes. Ouch.
The United States Court of Appeals for the Second Circuit in Manhattan argued this week that the trial court judge improperly dismissed it on the grounds that Cohen’s ex-wife filed her lawsuit after legal deadlines had lapsed.
“As we have said from the outset, these decades-old allegations by Mr. Cohen’s former spouse are patently false and entirely without merit,” said Jonathan Gasthalter, a spokesman for SAC, which is based in Stamford, Conn.
Meanwhile, with at least nine current or former SAC employees now having been tied to allegations of insider trading, Steve Cohen decided it was time to clarify the eye-brow raising timeline of his luxury shopping spree, which saw him snap up a Hamptons mansion and a Picasso painting for upward of $200 million days after he signed off on two settlements in which SAC agreed to pay regulators $616 million to resolve two insider trading cases.
Sandy Heller, Cohen’s art adviser, said on Wednesday that the sale was completed in early November of last year, the Times reports. Apparently news of the purchase was just bad timing: Cohen had his eye on Picasso’s “Le Reve” for almost a decade, his aides say. While the publicity surrounding Cohen’s purchase of the Picasso painting and a luxury Oceanfront mansion (was that announcement also bad timing?) may soon wane, revelations made by the hedge fund owner’s ex-wife 25 years ago are likely to stick around for quite a bit longer.
In her lawsuit, Patricia Cohen charged that her ex-husband made a $20 million profit by trading on a tip about the impending takeover of RCA by General Electric. The lawsuit said that Cohen told his former wife that it was not illegal to trade on the information. Uh-oh. When questioned by the S.E.C. about his trading, Cohen invoked his Fifth Amendment right against self-incrimination, the New York Times reports. No charges were ever brought against him related to that takeover.
The case is not expected to go to trial for some time. Cohen’s lawyers could file additional motions to dismiss the case on other grounds, the Times points out.
Still, Patricia Cohen’s revived lawsuit is likely to be much more than another slight distraction for Steve Cohen. As they say, there’s nothing like a vengeful ex-wife to bring down a powerful man.
Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio