April 21, 2016

Senator Warren Raises Concerns About SEC Decision to Approve Money Manager Application for Firm Owned by Steven Cohen

Text of the letter is available here (PDF)

Washington, DC - United States Senator Elizabeth Warren today wrote to Securities and Exchange Commission (SEC) Chair Mary Jo White to raise serious concerns about the agency's decision to approve the application of Stamford Harbor Capital, L.P., a firm that is indirectly-owned by Steven A. Cohen, to register as a money manager for outside clients. Cohen is the former manager of SAC Capital Advisors, and in January was barred by the SEC from "supervising funds that manage outside money until 2018" for his role related to insider trading among SAC Capital's portfolio managers. In announcing its settlement with Cohen, the Director of the SEC's Enforcement Division announced that its "strong" sanctions achieved "significant and immediate investor protection and deterrence."

Senator Warren wrote, "Just two months after the SEC announced this ‘strong', ‘significant', and ‘immediate' act of ‘investor protection,' the Commission approved the application of Stamford Harbor to register as an investment management firm. Stamford Harbor's April regulatory filings clearly state that Steven Cohen ‘is associated with Stamford Harbor by way of his indirect ownership' of the firm, which will retain up to 50 percent of its clients profits.

"...The SEC's decision to approve Stamford Harbor-and the January settlement terms that allowed this to happen - make a mockery of the SEC's core mission to 'protect investors.' The Commission has permitted a recidivist hedge fund manager, well-known for his former company's willingness to evade and ignore federal law, to once again profit from-and potentially exploit-investors. This is an unacceptable outcome from the nation's primary enforcer of securities laws, and it is the latest example of an SEC action that fails to appropriately punish guilty parties, deter future wrongdoing, and protect investors."

Senator Warren called on the SEC to put procedures in place to ensure that future settlement agreements cannot be circumvented in this way, and to provide information about other individuals or firms that were barred from managing funds or from engaging in other activities, yet presently are indirectly involved in such activities. The senator has previously expressed concerns about the agency's recent enforcement record.

Read a PDF copy of Senator Warren's letter here.

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