Whether it's making investments, collecting art orbidding for sports franchises, Steven A. Cohen has few rivals.
Cohen's hedge fund manages $14 billion in assets. His ownnet worth is more than $8 billion. He's bought Picassos, Monets and Pollocks.And he recently picked up a piece of the New York Mets baseball team.
But the good fortune of one of the country's wealthiest menhas come at a price: an epic legal battle with his ex-wife that offered anunwelcome look behind the scenes of his lavish lifestyle and, most recently, abrewing insider trading scandal capable of toppling his empire.
Last week, federal authorities arrested Mathew Martoma, a formerportfolio manager at an affiliate of the Stamford, Connecticut-based firm ownedby Cohen, on charges he used illegal tips about an experimental Alzheimer'sdrug to net more than $276 million for his fund and others.
Court papers don't name Cohen and federal authorities won'tdiscuss their investigation of him. But they also haven't disputed reports thatCohen is the "Hedge Fund Owner" repeatedly referenced in a criminalcomplaint against Martoma, marking the first time they have directly linkedCohen to a long-running probe of his firm, SAC Capital Advisors.
The papers describe how Cohen rejected the advice of his ownanalysts and instead bet heavily on Martoma's tips about secret data from astudy of the experimental drug. After learning through Martoma in 2008 thatexperiments weren't going well, Cohen instructed his top trader to begindumping stock, "and to do so in a way to not alert anyone else," thepapers say.
Martoma, who denies the charges, became the fourth personassociated with SAC Capital to be arrested on insider trading charges in thepast four years. An SAC spokesman has said the company and Cohen arecooperating with the inquiry and "are confident that they have actedappropriately."
But in a conference call with investors Wednesday, Cohenrevealed that the Securities and Exchange Commission had notified the firm thatit was considering enforcement action. Cohen assured callers that the firmplayed by the rules.
The anxiety at SAC Capital stands in stark contrast to themore charmed aspects of Cohen's meteoric rise to the hedge fund stratosphere,putting him No. 40 on the list of richest Americans.
A native of New York's Long Island, the 56-year-old Cohengraduated with a business degree from the prestigious Wharton School at theUniversity of Pennsylvania in 1978. He married his first wife, Patricia, a yearlater.
When they married, "both of us had very littlemoney," Patricia wrote in divorce papers.
That would change dramatically as Cohen became one of themost successful traders on Wall Street. The couple had two children and livedin a 5,500-square-foot (510-square-meter) apartment on Manhattan's Upper EastSide. They divorced in 1990. A year later, Patricia was back in court claimingshe had been cheated by their financial settlement.
The $48,000 a year that Cohen agreed to pay in childsupport, his ex-wife said, fell far short of the $230,500 a year she wasspending to raise them, including $100,000 for travel and $26,000 on gifts andparties. There also was a separate $16,000 bill from a psychiatrist fortreatment of both her and the children, she said.
Cohen remarried in 1992 and launched SAC Capital with $25million in assets, a total that grew into the billions over the next twodecades. In 2011, its main fund was up 8 percent, while other hedge fundsaveraged a 5 percent loss, according to Forbes.
Part of the formula for success has been high expectations,said Daniel Strachman, an industry expert who interviewed Cohen for a book onhedge funds.
"He's driven and he expects the people around him to bedriven," Strachman said.
"People who have worked there would tell you it's anintense environment where you're rewarded for success and punished forfailure," he added. "It's not an easy place to work and you wouldn'texpect it to be."
For example, prosecutors say Martoma, the alleged insidertrader, got a $9 million bonus for the year the allegedly illicit trades weremade.
Once secure in the realm of the super-rich, Cohen went on amodern art buying binge in the mid-2000s that made him the envy of othercollectors.
It's estimated that Cohen spent $300 million on hiscollection in just five years. He purchased Willem de Kooning's "WomanIII" for more than $130 million from entertainment mogul David Geffen. Amere $8 million landed a more obscure piece by British artist Damien Hirst — a14-foot (4.2-meter) tiger shark submerged in formaldehyde.
At auctions, Cohen became known for paying full price — andfor pulling the trigger with the same cool he brought to managing his hedgefund.
"Steve is so good because he does not have his ego tiedup in each trade," longtime investor George Fox told The New York Times in2005. "He is an anomaly in this business because he hasn't had three goodyears, he has had 23 good years."
This year, Cohen's tastes turned toward baseball. He made aserious run at ownership of the Los Angeles Dodgers. Though he didn't win theteam, Cohen didn't completely strike out. The Mets sold him a minority share asthe owners sought to recover from being duped in Bernard Madoff's Ponzi scheme.
Cohen has a philanthropic streak, too. He serves on theboard of the Robin Hood Foundation, a charity targeting poverty in New York.
But Cohen has been haunted by his past. His ex-wife sued himin 2009, claiming he hid assets to avoid paying a larger divorce settlement.
The suit's most sensational allegation was that Cohen hadconfided to her that he made $20 million after receiving an advance tip thatGeneral Electric was set to buy RCA in 1985.
Cohen got the tip from a fellow Wharton graduate "aspart of an effort to take care of one another," the suit alleged."They sometimes referred to their group of friends as the Whartonmafia."
Lawyers for Cohen asked a judge to throw out the suit,saying it was filed "to harass and generate media attention against Mr.Cohen." A judge agreed, finding the allegations were too old andunsubstantiated for the case to go forward.