The slow exodus of traders and analysts continues from SAC Capital Advisors, the hedge fund founded by Steven A. Cohen.
In the wake of the firm’s recent guilty plea on insider trading charges, several traders and analysts have landed new positions at other financial firms.
Among the latest moves, BlueCrest Capital Management, a London-based hedge fund, has hired several employees over the last three months. They include Nicholas O’Grady, a former SAC oil and gas portfolio manager who joined BlueCrest in November after working nearly two years for the Sigma Capital division of Mr. Cohen’s hedge fund.
An energy analyst, Eugene Lipovetsky, joined him at BlueCrest soon after. BlueCrest, which manages $35 billion, has already hired Lia Forcina and Alidod Shirinbekov from SAC’s soon-to-be-closed London office.
SAC continues to be under pressure from the continuing insider-trading investigation. On Wednesday, one of the firm’s highest-ranking employees to be charged in the inquiry, Michael S. Steinberg, was convicted on five counts of securities fraud.
Hedge fund employment recruiters say they expect the pace of departures from SAC to quicken after the firm fully pays out year-end bonuses later this month and in February. SAC, which began the year with $15 billion and nearly 1,000 employees, is in the process of slimming down as it adjusts to running a family office that will mainly manage Mr. Cohen’s own money.
The firm is telling employees not to expect additional job reductions, yet it’s not clear how many of SAC’s remaining 300 traders and analysts will be needed going forward, or whether the firm will shutter other offices. The firm, which employed 950 people in late September, has since let go of about two dozen marketing and investor relations employees, roughly 50 people in its London office and at least a half-dozen traders and analysts in the United States.
The firm’s guilty plea, which was reached in November with federal prosecutors and is still being reviewed by a federal judge, requires SAC to stop managing money for wealthy investors, pensions and other institutional investors.
To that end, the firm recently signed a deal to sell its SAC Re reinsurance business and is continuing to return the $6 billion of outside money that was invested with the firm at the beginning of the year.
Mr. Cohen is likely to change the name of SAC once it completes the transition from a hedge fund to a family office, but no name has been settled on, said people briefed on the matter.
Jonathan Gasthalter, an SAC spokesman, reiterated an earlier statement that the firm was “focusing on our transition to a family office and our core investing business.â€
But much about what SAC will look like after that transformation remains unknown. It’s not clear whether Mr. Cohen, an avid art collector, will keep all of the roughly $9 billion he already has with SAC invested with his family office and further reduce his daily trading activity.
Over the last two years, as the insider trading investigation into SAC began to heat up, Mr. Cohen gradually scaled back the amount of time he committed to trading in his own portfolio. Some have even suggested Mr. Cohen should stop trading altogether and simply serve as the new firm’s chief executive.
The level of uncertainty at the firm can be seen in the rise this year in the number of SAC employees who have posted profiles on LinkedIn, the job networking website. The number of SAC employees joining LinkedIn has roughly doubled this year, to 166 people. Recruiters say they often see a surge in LinkedIn postings when people are looking for jobs or worried about their jobs.
Even though the firm was in the midst of the investigation, 2013 was another profitable year for SAC. The firm’s main portfolio was up almost 16 percent as of the end of October, after charging some of the hedge fund industry’s highest fees. A person briefed on the matter said that the firm had generated about $4 billion in gross profit as of the end of October, or roughly two times the $1.8 billion in fines and restitution the firm has agreed to pay to federal prosecutors and securities regulators this year.
Still, the firm’s guilty plea will not necessarily end the scrutiny by regulators and law enforcement. Mr. Cohen still faces a civil administrative proceeding filed by the S.E.C., which has charged him with failing to properly supervise his employees.
Mr. Steinberg’s conviction could put more pressure on the firm, and affect the coming trial of Mathew Martoma, a former portfolio manager charged with using inside information to generate $276 million in profits and avoided losses for SAC in 2008. Jury selection is set to begin on Jan. 6 in his trial.
The Federal Bureau of Investigation is continuing to investigate allegations that some employees of SAC used inside information to make trades in shares and options of Weight Watchers, InterMune and Gymboree, according to a person briefed on the matter. In November, when the United States attorney in Manhattan, Preet Bharara, announced that SAC would plead guilty to securities fraud charges, he emphasized that his office was not finished investigating allegations of wrongdoing by employees of the hedge fund.
