Social Rejection?: Hedgie Steve Cohen Wants Out of East Hampton

The world’s most infamous trader wants to get out of East Hampton, NY. Yesterday I reported for the New York Observer that Stevie Cohen, of SAC Capital, is trying to broker a private deal to sell a $60 million ocean front home he bought less than a year ago. His reasoning, according to a person on the deal, is East Hampton is ‘too Jewish’ and he has instructed people to start looking for another home in other Hampton enclaves.

This one real estate transaction has fueled a social media debate about what he’s really doing. Having lived and worked among Cohen-ites and his SAC Captial traders for the last decade out in Connecticut’s gold coast I don’t think his comment is a signal of anything anti-Jewish. Instead I believe it shows his social network could be failing since the hedge fund he founded plead guilty to supporting a culture of massive inside trading.

Cohen paid the highest fees to broker dealers who moved his trades for over a decade but according to people who worked with him, starting from his early days a Gruntal & Co, they hated him because of the way he did business. I’ve been told stories of dealers at Lehman leaking other funds trade volume to Cohen and Cohen even funding smaller hedge funds to use them to create liquidity when he wanted to short a stock. The years of alleged cheating to beat the markets has left sour grapes in mouth of many on Wall Street. And now that he’s shutting down his large hedge fund his volume of fee paying to The Street will shrink. This could mean people aren’t as motivated to play friendly with the Cohens in their social time.

Stevie Cohen Family photo

Before we ran the story about why he wants to sell his East Hampton home I had multiple conversations with Cohen’s outside pressman (aka his block and tackle Flack) Jonathan Gashalter about what was going to be reported and he expressed anger at the idea we’d print the ‘too Jewish’ comment. He also would not go on the record to say neither house is up for sale before he went to print. No one knows what’s really in this hedgie’s mind when he said it and I’m sure Cohen never thought it would get repeated. Stevie Cohen has gotten stories held or changed for years through Gashalter but as the market ( and my peers in the media) are apparently waking up to how he operates it was refreshing to see the New York Observer stand by the news report and my reporting.

The news on anything Cohen, or what his family, does isn’t going to stop. Nick Verbitsky, director of Frontline’s new blockbuster film ‘To Catch a Trader’, told me the FBI even admitted that have three stock trades they are still investigating that could lead to criminal charges against Cohen. It’s my understanding one of them has a whistleblower willing to flip on Cohen; which is something we have yet to see in the DOJ’s seven plus years of trying to nail Cohen for inside trading.

Even if the DOJ is never able to get a criminal charge against Stevie, how the markets and his social network respond to what ‘they think’ he’s done is much more of a barometer for how The Street will or won’t police itself.

Thanks Readers: Your Donations Fund Great Journalism

It’s my 41st birthday today and I wanted to say to thanks to all the readers and fellow financial journalist who have helped make a news publication over the last three years. Last year we raised a few thousand dollars to revamp the look of this site which made it easier to read on mobile deceives and streamline the layout for better readability. The news and opinion published at this site is reader driven and reader funded. This year I’d like to raise at least one thousand dollars to cover legal document research needed for investigative reporting and help fund the web bill to host this site.

In the last year we:
– Beat a DDOS attack that intended to shut down this site by a subject of some of my financial reporting
– Covered problems in the CT States Attorney office and police misconduct
– Reported on investor fraud in smaller hedge funds and broker dealers often ignored by my peers at the major financial news
– Kept you informed of the mortgage-backed security fraud investigations by federal regulators and rmbs investors in the JP Morgan / Bear Stearns cases

A little bit about my reporting impact this year:
-Three years of reporting turned into DOJ criminal arrest of three partners at Ridgefield-based New Stream Capital – a once billion hedge fund that cheated it’s investors and clients. They are facing 10 years in jail
-Frontline made a move about my original reporting on the criminal acts of Bear Stearns traders in the mortgage securities business who the DOJ had ignored and this month we are seeing the DOJ finally take action against JPM with double-digit billions in fines and maybe the Bear Stearns traders for these sins.
-We exposed a new fraud scheme at Sun Trust Bank that spear-headed a current SEC investigation
-And somehow stayed out of jail after the malicious prosecution of a local States attorney looking to force a journalist to expose whistleblowers/story sourcing

At I report the news with the same editorial standards and ethics I carry out at the financial trade publications who buy my freelance stories. And with your generous donations it enables me to make sure the news I am covering stays outside of a paywall and is at times painfully accurate and always enlightening.

If you can give $10 or $100 today (see the Paypal buttons or BTC button on the homepage) every donation makes a difference to delivering excellent smashmouth investigative journalism.
Thanks to my fans from around the world for coming back again and again to read!

Hedgie T.Boone Pickens Son Fights Back: Counter Suit Says Dad Stole Money From Him

This story has been updated with the results of the anti-SLAAP hearing. See bottom of Story.

The Texas oilman who sued his son for invasion of privacy after he wrote a tell-all blog about T.Boone Pickens parenting problems is now facing a counterclaim suit for millions. Michael Pickens filed a lengthy and detailed list of claims against his famous millionaire Dad for allegedly taking control of assets and funds that Michael owned. Michael’s attorney Collin Porterfield also filed an amended motion to dismiss Boone’s suit claiming their new ‘extortion’ claim is utter nonsense and not even legal for Boone’s attorneys to try to claim because of some legal reason about the negotiations being private and not allowed to be litigated.

Michael’s counterclaim suit alleges Boone and another unnamed person forged Michael’s name on a U.S. Treasury tax refund check of $138,000 in 1988 and Boone took the money. Michael writes he sued the bank that cashed the check and they wanted to settle for $450,000. The lawsuit says Michael’s oldest sister, Deborah (who is not currently suing Mike with the rest of his siblings and dad), talked him out of taking the settlement because it would hurt Boone who had indemnified the bank against any losses. The tax return was from a cattle feeding operation Michael had run that appears to be set up by his Dad’s attorneys. And that’s only one of the explosive financial shenanigans in the suit that Michael and his Dad allegedly went through.

To back up Boone libel/defamation suit he has to show some kind of motive that his son had intent to defame him or maliciously lie about him in his blog. The second legal team Boone hired came up with an extortion claim because Michael and attorney Porterfield had private settlement negotiations about taking down the blog and giving up book and TV rights to the tell-all family story in exchange for a $20 million payment from Boone. Porterfield told me Mike estimated his dad at taken about $17 million with interest from him over his lifetime and Porterfield rounded up the number to $20 million adding in possible book/tv revenue. The problem is the extortion claim could be hard to prove on Boone’s part because as I reported earlier Michael had written his addiction ‘recovery story’ a few years back and never asked his Dad for money to take it down. Boone didn’t even notice it for a long time and it was Boone’s divorce attorney, McShane, who approached Michael for a settlement. The whole case reads like a season of the popular 80’s TV show DALLAS.

Tomorrow at 2pm in Dallas, in Texas state court attorney Porterfield and Boone’s attorney will argue if this case should be certified an anti-slap suit. Which means the suit would be considered frivolous if Boone can’t prove his defamation, libel, and extortion claim and Boone would have to pay his son’s attorney fees. Right now Porterfield isn’t getting paid by Michael because Michael can’t afford to pay Boone’s costly legal attack. Apparently Boone’s thought he’d win this whole case early because he knew his son couldn’t pay a lawyer and was taken off guard when Porterfield showed up to fight for Michael’s first amendment rights.

Instead of silencing his son, T.Boone has open a can of worms as Michael filed even more public documents about their sordid family past including a Christmas letter from Boone begging his adult kids forgiveness for kind of being a screwed up Dad. The letter written to his five kids, and signed by Boone on December 23rd 1999, was filed yesterday as exhibit 8 in Michael’s affidavit.

Boone writes, “You should know I’m taking responsibility for my part in the dysfunction of this family….This letter is to ask for your forgiveness. I am sorry for any hateful and angry words, the lack of patience, and the message of unacceptance you often felt. I know there times I left you down and I am sorry.”

Michael also stated in his affidavit that he never wrote Boone sexually abused him like Boone claimed in his suit. He does stick by his physical abuse claim because he was punished with a belt and whipped in his childhood. As far as Boone being an addict, Michael clarifies he’s talking about his father’s addiction to trade equities and commodities but also believes his Dad does drink a lot. There’s a lot more juicy family history in the counterclaim, which you can read below.

Stay tuned as we’ll see if the court rules in favor of Michael tomorrow and if Boone starts to talk real money settlement as a result. Personally I think it would be a disservice to the public if Michael’s blog was taken down as it’s a voice to addiction recovery success and also some really entertaining reading.

UPDATE 5-18-2013: Boone’s attorneys were able to convince Judge Parker that most of their claims should survive. The judge did throw out the ‘violations through harmful access by a computer’ claim. This claim related to Michael using social media and twitter to send out links to his story. His sister Pam was also trying to use it to hold Michael accountable for the group email sent to her friends and bosses at Morgan Stanley saying she was using her mother’s illness to drum up business; sent by a person calling themselves Robert Barris. What that means is Boone or Pam will have to pay Michael’s attorney fees for litigating that claim.

Boone’s suit now centers on accusations of invasion of privacy by disclosing private facts publicly, common law defamation, libel and intent to inflict emotional distress through extortion.

Judge Parker questioned if Michael speaking about what happen to his siblings at the hand of Boone can link to Michael telling a story about his addiction being a result of abuse that happen to him by his dad. Parker said in court, “If Mike Pickens wants to say his childhood experiences caused his addiction , what right does he have to tell the world private things that might have happened to his siblings? I am trying to figure out how those are not a gratuitous pile-on.”

Attorney Porterfield told Judge Parker, “To the extent the family is insulted, that’s not necessarily actionable.” Then Boone’s attorney Leland de la Garza argued just because a family controversy is interesting to the public that doesn’t make it a public issue.

It sounds like Parker wants to hear the plaintiffs, Boone and three of his kids, prove Michael’s statements about the family are not true before she throws out any more claims.

But continuing this suit in court isn’t necessarily a negative for Michael since he filed a counterclaim Boone can’t dismiss that and has to litigate all the claims his son made about this Dad taking money from him through stock transactions and other means. Boone could end up having to pay his son for those claims if the court finds them valid which is not anywhere near Boone’s goal to silence his son’s speech.

Attorney Porterfield said he will appeal Judge Parker’s decision to allow the other claims and not apply the anti-slaap law to them. So right now Boone will be throwing more big money to try to stop his son writing about the family on the blog, Michael gets to keep writing it and isn’t spending any money on legal fees to defend the suit. And if they get through the whole family’s depositions more embarrassing history will be recorded in the public record. Sounds like Boone is about to indirectly pay for all the research if someone wants to write a T.V. movie or book about the dirty details of his family.
External resource for help with addictions

Declaration of Mike Pickens