Federal authorities are trying to topple Steven A. Cohen from his heights as one of the world’s top hedge fund managers by stripping him of the right to invest other people’s money.
Could fighting the non-criminal proceeding that the Securities and Exchange Commission initiated last week hamper Cohen’s growing arts philanthropy -- which includes a recent donation of at least $1 million to L.A.’s Museum of Contemporary Art, whose board he joined early in 2012?
A spokesman for Cohen declined to address that question Monday, or the related one of whether his troubles on Wall Street might curtail the art collecting that has made the Connecticut resident one of the world's most active art buyers.
As for the SEC’s administrative proceeding against him, the spokesman said in an email, “Steve Cohen acted appropriately at all times and will fight this charge vigorously.”
The SEC contends that two portfolio managers for Cohen’s Stamford, Conn., investment firm, SAC Capital Advisors, elicited insider information in 2008 concerning three companies, and parlayed it into $275 million. Cohen, the SEC says, ignored “red flags of potentially unlawful conduct ” and “failed to take reasonable steps to investigate and prevent” the insider trading.
The two investment managers face securities fraud and conspiracy charges. The SEC announced in March that Cohen's firm had agreed to pay a record $616 million to settle civil suits the government had brought over insider trading.
MOCA announced in April that Cohen and his wife, Alexandra, were among 23 individual donors or couples who had pledged between $1 million and $10 million to a campaign to boost the museum's endowment from about $20 million to $100 million. MOCA did not provide more specific information about the gifts, which it said brought the campaign within $25 million of its goal.
The museum is attempting a fiscal turnaround after more than a decade of difficulties. Its budget fell to $14.3 million in the recently concluded 2012-13 fiscal year, the lowest since the late 1990s. Its curatorial staff has dropped from five to two since early 2012.
The 2011 federal nonprofit tax return for the Steven A. and Alexandra M. Cohen Foundation -- the most recent one available -- shows $3.4 million in donations to arts and culture organizations for the year, up from $2.2 million in 2010. Cultural giving accounted for about 8% of the $42.7 million in overall grants.
The $3.4 million does not include an additional $6.1 million for Brown University in Providence, R.I., where Cohen has been a trustee since 2008. Brown’s $30-million Granoff Center for the Creative Arts opened in 2011 and houses the Cohen Gallery, dedicated to exhibitions by the university’s arts departments.
The Granoff Center was designed by Diller, Scofidio + Renfro, the firm behind the Broad Collection museum expected to open next year across Grand Avenue from MOCA. The Cohens’ foundation gave Brown nearly $19 million over three years from 2009 to 2011.
During that period, the foundation also gave $3 million to New York University’s Tisch School of the Arts, $2.4 million to New York’s Museum of Modern Art and $836,000 to the Metropolitan Museum of Art.
As art buyers, Cohen and his wife have regularly made the annual worldwide top 10 compiled by ArtNews magazine, which relies on reports from art world insiders.
This year the New York Post reported that Cohen bought Pablo Picasso’s painting, “Le Reve” (“The Dream”) for $155 million from hotel and casino magnate Steve Wynn. Cohen's reported acquisitions also include Willem de Kooning’s “Woman III,” bought from David Geffen for $137.5 million in 2006, and $8 million for a Damien Hirst conceptual piece consisting of a dead shark preserved in a tank of formaldehyde.
In March, Forbes magazine estimated Cohen’s worth at $9.3 billion, up $1 billion from 2012; despite the jump, he slipped from 106th to 117th in Forbes' rankings of the world's richest people. Last year Cohen was an unsuccessful suitor to buy the Los Angeles Dodgers; he owns a minority share of their National League baseball rivals, the New York Mets.
The SEC’s filing said Cohen’s firm managed about $15 billion in assets as of early 2013. It said that an administrative law judge would rule within 300 days as to whether Cohen violated federal rules for investment advisors. If the allegations stick, the penalties could include fines and Cohen’s losing the right to manage investments for clients, for which his firm charges “some of the highest fees in the …hedge fund industry,” according to a recent Reuters report.
Reuters said that SAC Capital Advisors continued to post investment gains in June, even while the stock market fell. It said that Cohen’s personal fortune and holdings of SAC employees account for at least $8 billion of the money it invests.