In 1990 New York securities trader Steven Cohen was just beginning to see the fruits of his Wall Street career ripen. The only bad news was that his marriage didn’t survive and he needed to negotiate a financial settlement with his wife, Patricia Cohen.
At the time he told his wife that he had lost $9 million dollars in a co-op apartment investment he made in 1986, leaving his net worth at a mere $8.1 million. She didn’t believe him, but had no grounds to refute his assertion.
Mr. Cohen remarried two years later and built his business, SAC Capital, growing it from $25 million in assets to several billion dollars. Life was very good for him, until 2008.
It was then Ms. Cohen discovered a court file that revealed her ex-husband had settled the investment loss case with one of his co-op partners and recovered $5.5 million. She filed a lawsuit against him in 2009 alleging fraud.
Unfortunately, the first judge who heard the case threw it out saying the claim was too old to pursue and was unsubstantiated.
The Manhattan Appeals Court saw it differently. This month they reinstated Ms. Cohen’s lawsuit holding that the lack of timeliness in its filing was because she only discovered evidence of fraud eighteen years after the divorce.
My advice to Mr. Cohen: “Settle this case now, after all, you are a multi-billionaire and will likely not even notice a shortage of a couple of million.”
Besides, Cohen’s $15-billion dollar hedge-fund is the target of an insider trading investigation that has already seen the arrest of five individuals related to his Connecticut-based business. As well, two companies affiliated with SAC Capital have recently settled insider trading allegations with the US Securities and Exchange Commission for $614 million dollars, the largest insider trading settlement in the United States.
While there have been no charges laid against Mr. Cohen, the SEC is breathing down his neck. He really doesn’t need the aggravation of his ex-wife’s court action and the publicity that accompanies it.
Family law is different however. Cases that should be settled often are not because of petty vindictiveness and the need to win, and of course, Cohen can afford to bury his ex in legal fees.
Lawdiva aka Georgialee Lang