Charge Against Hedge Fund Stir Economic Concern In Fairfield County
By JOHN CHRISTOFFERSEN, Associated Press
STAMFORD, Conn. (AP) _ In a state with one of the world’s highest concentrations of hedge funds, SAC Capital Advisors stands out as one of the biggest, known for bankrolling Stamford’s popular Thanksgiving Day parade. The criminal charges announced Thursday against the firm have some fearing for the future of one of the region’s larger economic engines.
Prosecutors charged SAC with wire fraud and securities fraud, accusing the Stamford-based company of letting insider trading flourish over a decade and making hundreds of millions of dollars illegally. SAC said it “has never encouraged, promoted or tolerated insider trading and takes its compliance and management obligations seriously.”
With nearly 1,000 employees, SAC is one of the 10 largest employers in Stamford, a city long known as a major jobs center, said Laure Aubuchon, the city’s economic development director. Those high-paying jobs have a multiplier effect in generating other jobs from lawyers to limo drivers, she said.
“We are concerned about the employees and their families, the potential fallout that may happen,” Aubuchon said. “Clearly they are an engine of economic activity here apart from what they do themselves.”
The company is owned by billionaire Steven A. Cohen, who has not been charged.
A not guilty plea was entered Friday on behalf of SAC. The company pledged to continue normal operations.
The criminal case could topple the firm, which once managed $15 billion in assets, and that possibility led the prosecutor to note that the government was not seeking to freeze SAC’s assets.
The loss of SAC “would leave a hole in our financial services sector,” said Joe McGee, vice president of public policy for the Business Council of Fairfield County. But McGee said there was no indication that would happen.
As SAC faces the criminal charges, Bridgewater Associates, which manages about $130 billion in investments worldwide, is planning to relocate from nearby Westport to Stamford by 2017. Connecticut has promised up to $115 million in state aid to support the hedge fund’s plans to build a new corporate headquarters in Stamford and create up to 1,000 jobs within 10 years.
SAC helps pay for Stamford’s Thanksgiving Day balloon parade, which draws about 250,000 people, as well as summertime sculptures placed around downtown.
Cohen and his wife have a foundation whose contributions in recent years included $5 million for a skating rink in Stamford and millions to Achievement First to help build charter schools in Connecticut and to Stamford Hospital for wellness programs for children and fitness centers in two high schools.
“Our relationship has been a very positive one over the years,” said Dr. Edward Schuster, who sits on the hospital’s board. “We hope this will continue.”
The company and the Cohens stand out for their generosity, said Sandy Goldstein, president of the Stamford Downtown Special Services District, which runs the parade. That support plays an essential role with cultural activities and the nonprofit world, she said.
“I really think this company will sustain itself,” Goldstein said. “I think their record of contributing will continue.”
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