First Friday Book Synopsis

Stephen A. Cohen, who was the focus of one of the most intensive insider trader investigation in history, is the subject of a new best-selling business book that debuted at # 3 on the Wall Street Journal best-seller list (January 18-19, 2016, p. C10).

The book, Black Edge:  Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street (Random House), was released on February 7, and as of today’s writing is in the top four best-selling books in three Amazon.com sub-categories.

The author is Sheelah Kolhatkar, is a current staff writer at The New Yorker.  She is a former hedge fund analyst.  Her features focus upon Wall Street, Silicon Valley and politics.  Kolhatkar has appeared on numerous business television programs, and also been a guest columnist in several business magazines, as well as the New York Times.

Who is Stephen Cohen, and what exactly is this book about?  Please read this summary taken from the publisher’s website at http://www.penguinrandomhouse.com/books/234210/black-edge-by-sheelah-kolhatkar/9780812995800/.

“The rise over the last two decades of a powerful new class of billionaire financiers marks a singular shift in the American economic and political landscape. Their vast reserves of concentrated wealth have allowed a small group of big winners to write their own rules of capitalism and public policy. How did we get here? Through meticulous reporting and powerful storytelling, New Yorker staff writer Sheelah Kolhatkar shows how Steve Cohen became one of the richest and most influential figures in finance—and what happened when the Justice Department put him in its crosshairs.

“Cohen and his fellow pioneers of the hedge fund industry didn’t lay railroads, build factories, or invent new technologies. Rather, they made their billions through speculation, by placing bets in the market that turned out to be right more often than wrong—and for this they have gained not only extreme personal wealth but formidable influence throughout society. Hedge funds now manage nearly $3 trillion in assets, and competition between them is so fierce that traders will do whatever they can to get an edge.

“Cohen was one of the industry’s greatest success stories. He mastered poker in high school, went off to Wharton, and in 1992 launched SAC Capital, which he built into a $15 billion empire, almost entirely on the basis of his wizardlike stock trading. He cultivated an air of mystery, reclusiveness, and extreme excess, building a 35,000 square foot mansion in Greenwich, Connecticut, and amassing one of the largest private art collections in the world. On Wall Street, Cohen was revered as a genius.

“That image was shattered when SAC became the target of a sprawling, seven-year government investigation. Labeled by prosecutors as a “magnet for market cheaters” whose culture encouraged the relentless hunt for “edge”—and even “black edge,” or inside information—SAC was ultimately indicted in connection with a vast insider trading scheme, even as Cohen himself was never charged.

“Black Edge offers a revelatory look at the gray zone in which so much of Wall Street functions, and a window into the transformation of the U.S. economy. It’s a riveting, true-life legal thriller that takes readers inside the government’s pursuit of Cohen and his employees, and raises urgent questions about the power and wealth of those who sit at the pinnacle of modern Wall Street.”

A less biased, although equally positive review appeared in the New York Times, written by Jennifer Senior on February 1, 2017.  One of her points is:  “But my hunch is that readers will most remember “Black Edge” for showing them just how alarmingly pervasive insider trading was in the years surrounding the 2008 collapse. It became commonplace, domesticated — dare I say it? — normalized.”  You can read that review by clicking on this site:  https://www.nytimes.com/2017/02/01/books/review-black-edge-an-account-of-a-hedge-fund-magnate-and-insider-trading.html?_r=0.

And, in case you feel sorry for Cohen, the last line in Senior’s review says, “[Kolhatkar] notes that in 2014, Cohen made $2.5 billion by trading his personal fortune alone. ‘He is making plans to reopen his hedge fund,” she writes, “as soon as possible.’”

Please continue to monitor our website at 15MinuteBusinessBooks.com, to see if this book rates one of our monthly selections at the First Friday Book Synopsis for presentation.  Randy and I will discuss this very soon!