Image by Colin & Sean DoyleEt tu, Kenny?
Yesterday, the FBI issued a "wide ranging" subpoena to Citadel, the powerhouse Chicago based hedge fund run by Ken Griffin. Citadel joins fellow hedge funds Diamondback , Level Global, and SAC Capital (amongst others) in receiving FBI subpoenas as regards insider trading. Rumors are running wild as to what exactly the feds have on some of America's most powerful hedge fund managers. However, there is little doubt that the government is targeting the biggest fish in the sea.
As more big name traders get pulled into this insider trading investigation I must admit this situation is starting to remind me of baseball's steroid scandal. In many ways Steve Cohen and Ken Griffin are the McGwire and Bonds of the trading world. Their (Cohen's and Griffin's)average yearly returns of 20-30% are huge (the market equivalent of 70 home runs), and to many observers unbelievable. Like McGwire and Bonds, there has long been whispers that big hedge fund managers use "shortcuts" to give them an unfair advantage (i.e insider information). From my perspective, I do hope the rumors and allegations are false, as Cohen and Griffin are some of my trading heroes. But then again, so were Andy Pettitte and Roger Clemens...
Links:
CNN Money: "Don Chu Arrested in Insider-trading Probe."
NY Post: "Targeted Hedge Funds Are Toast."
Fortune: "Why The Feds Want Steve Cohen."
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