The Barometer is smiling. Mr. Cohen, the trading rules are not your problem. Every single fund manager who was with you or formerly affiliated with your firm had top-notch training. Former SEC Chairman Harvey Pitt did some of the training for SAC Capital. Your training records reflected full participation by those traders and managers who were charged with insider trading. Your managers know the trading rules. The problem is culture. As a recent court decision and some dropped charges indicate, the traders had their toes to the line in terms of legality, but may not have crossed the line. The problem is a culture that encourages finding that tidbit that allows you to trade ahead of the market. Even back in the days of Michael Douglas’s Gekko, the boys knew the rules. But, they also knew that they would be rewarded with bonuses and the good life if they got those tidbits.
Instead of hiring law enforcement to ensure compliance with the rules, Mr. Cohen should be working on his incentive systems, his language, his signals, his hires, his bonuses — all the things that make decent human beings who know the rules either break those rule or come so darn close that Cohen ends up paying billions in fines. In short, it ain’t a misunderstanding of the rules or a lack of training, it is the culture, it is the culture.