Sunday, 23 October 2016
Last updated 2 days ago
Feb 3 2014 | 4:00pm ET
SAC Capital Advisors' transformation from one of the world's largest and most successful hedge funds to a family office managing firm founder Steven Cohen's fortune is set to take a big step forward next month.
SAC, which is returning outside capital as part of its plea deal on insider-trading charges, will implement its new corporate structure by the middle of next month, The New York Times reports. It will also change its name.
What that name will be is not clear. But the SAC's new look is coming into focus, and will feature new controls and a simplified structure, with Cohen remaining at the helm.
But there will be a new layer of management between Cohen and his traders—in an effort to insulate him from any illicit activities on the part of those traders. Federal prosecutors and investigators have struggled to build a case against Cohen, but have failed to win the cooperation of any of his traders. Cohen also faces Securities and Exchange Commission allegations that he failed to supervise his employees, eight of whom have been charged with insider-trading.
"Steve Cohen and the management team are determined to do what they can to prevent a repeat of the problems we experienced and so we are simplifying out business, increasing management oversight and continuing to strengthen our compliance program," a SAC spokesman said. "This goes beyond rebranding."
The SAC name isn't the only thing going by the wayside: The firm plans to merge its three trading units, SAC, CR Intrinsic and Sigma Capital, into two new entities, one of which will serve as the parent company. One of those units will be led by current head of trading Phillipp Villhauer, and the other by former SAC London chief Michael Ferrucci. There will also be a third division, focused on quantitative trading, headed by Ross Garon.
Ferrucci, Garon and Villhauer will all report to the new management layer, which will in turn report to Cohen and SAC President Tom Conheeney.
SAC itself will also survive, at least for now, in vestigial form: The rump of the former hedge fund will continue on to unwind side-pocketed assets before finally ceasing to exist.
As SAC prepares to for the changes, it has also lost one of its banks: Deutsche Bank has ended its relationship with the hedge fund, fearing the "reputational risk" of continuing to associate with the firm, according to the Times. The move has been months in coming: Deutsche Bank refused to renew a private bank loan to SAC in the fall, after SAC had repaid it.