Steve Cohen, meet Al Capone

Al Capone was a bad boy. How bad? He cheated on his income taxes. They sent him to prison for that. Not for the people he gunned down, nor for any of the other gross illegalities he committed as a notorious Chicago mobster. It was tax evasion that got Capone.

Al Capone was a bad boy. How bad? He cheated on his income taxes. They sent him to prison for that. Not for the people he gunned down, nor for any of the other gross illegalities he committed as a notorious Chicago mobster. It was tax evasion that got Capone.

Now comes Steven Cohen, who’s not known to have killed anyone and is not a mobster (though, Capone didn’t think he was one either – he called himself a “businessman”). Yet, Cohen a multibillionaire Wall Street hedge-fund huckster, shares with Capone the unpleasant experience of being pursued by the law – and possibly getting nailed on the Wall Street equivalent of tax evasion.

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Cohen’s hedge fund, SAC Capital, was caught pocketing a gabillion or so in profit through the criminal enterprise of insider trading. But Steve was able to dodge the charges in the usual Wall Street way: By buying off the government. SAC paid about $600 million to the Securities and Exchange Commission to make the problem go away, without having to admit guilt or be bothered by a trial. Neat.

Yeah, a $600 million fine would be a death sentence for you and me, but it’s barely a hiccup for Cohen & Company – they typically pull in about a billion dollars a year just in “management” fees, not counting profits on investments. So Steve skated. Or so he thought.

It turns out that the new head of the SEC, Mary Jo White, is not a pushover for hotshot finaglers, so Cohen suddenly finds himself facing a personal administrative charge: “Failure to supervise” his hedge-fund traders. That might seem minor, but like Capone’s tax evasion, it could be very major, for the punishment is to be barred from conducting Wall Street business.

See, when regulators have the will, there really are ways to go after Wall Street lawlessness.

“Battling the bastards is about as much fun as you can have with your clothes on.”

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