Steven Cohen's veteran top trader is leaving, just months before the formerly-barred hedge fund manager is expected to resume managing outside investor money.
As the NYT's Matt Goldstein reports, Phil Villhauer, 52, who started working for Cohen's then-SAC Capital in 2002, was promoted to global head of trading at the successor company, Point72, shortly after Cohen was forced to stop accepting outside investors’ money as part of an insider trading settlement with federal authorities, converting his hedge fund into an $11 billion family office.
“For 15 years, Phil Villhauer has been an integral member of the firm’s family,” Mr. Cohen and Point72’s president wrote Tuesday in an internal email that was reviewed by The New York Times. “We are sad to let you know that he is retiring from Point72.”
As is well-known, SAC was one of Wall Street’s most successful hedge funds for years, largely as a result of reliance on "expert networks" and "information arbitrage" (a politically correct term) allowing it to charge some of the industry’s highest fees (usually in the 3 and 45 vicinity), managing more than $14 billion in assets, although it subsequently emerged that the reason for SAC's success was insider trading, to which the company pled guilty in 2013, three years after Zero Hedge first made the accusation. The guilty plea required Cohen to stop managing money for outside investors, and the billionaire converted his hedge fund into a family office to trade his personal fortune.
Steve Cohen at work
Cohen was also barred from managing money for outside investors as part of a regulatory settlement with the SEC over a claim he failed to properly supervise employees, but that restriction ends at year’s end, and Cohen is moving toward reopening a hedge fund, having appeared at a recent industry conference and having his representatives reach out to potential outside investors.
As for Cohen's top trader, Goldstein writes that despite his crucial role at SAC, Villhauer was little known on Wall Street until he appeared as a witness in the insider trading trial of Mathew Martoma, a former portfolio manager at SAC who was convicted in 2014. Prosecutors said Mr. Martoma’s illegal trades helped SAC avoid losses and generate profits totaling $275 million.
In the trial, prosecutors introduced into evidence several emails from Mr. Villhauer, including one in which he referred to Mr. Cohen as “the big guy.”
Mr. Villhauer testified that Mr. Cohen told him in July 2008 to quickly sell millions of shares that Mr. Martoma had amassed in a drug company and to do it with “limited visibility.” Prosecutors said those trades began after Mr. Martoma and Mr. Cohen had a 20-minute Sunday phone call. The call took place just days after prosecutors said an inside source told Mr. Martoma about problems with a major clinical trial the drug company was involved in.
According to the NYT, the Point72 email advising of Villhauer's departure from Cohen and Doug Haynes, the firm’s president, gave no reason for Villhauer’s retirement from the firm with more than 1,000 employees.