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SAC Capital family office conversion confirmed

Steve Cohen has this week told staff at his hedge fund, SAC Capital, that the firm, which once managed $15 billion, will be converted into a family office.
Steve Cohen
Press Association

Steve Cohen has this week told staff at his hedge fund, SAC Capital, that the firm, which once managed $15 billion, will be converted into a family office.

Earlier this month, US prosecutors announced SAC Capital had agreed to plead guilty to insider trading charges, and faced a fine of $1.2 billion. Cohen, whose own wealth is estimated to be $9 billion, has not been charged with any crime.

In an email leaked to Reuters, Cohen told staff: "We are now moving from a firm which manages external capital to a 'family office' that will manage my capital and employee capital only.”

He also said the firm’s chief operating officer Sol Kumin had resigned because it no longer needed the same degree of business development or investor relations resources that it had as a hedge fund.

In March, SAC Capital was hit with a fine of $616 million for related insider trading charges, and speculation has been rife since then that the firm’s conversion into a family office was imminent.

This week the high court trial of Michael Steinberg, the highest-level SAC Capital employee to face charges, began in New York.

Six individuals have been charged in relation to insider trading at the firm, but Steinberg is the first to fight his charges.

Another SAC Capital manager, Matthew Martoma, is due to go to trial in the new year.

Since the passing of the Dodd-Frank Act, several large hedge funds have transitioned into family offices.

George Soros’ Soros Fund Management closed in 2011, and Millbrook Capital Management, which became a family office for its founder, John Dyson, closed last year – however, unlike SAC Capital, neither had been investigated for breaking federal laws. 

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