Billionaire Steve Cohen Suspected of Manipulating Prices on the Art Market
Billionaire hedge fund manager and noted art collector Steven A. Cohen was a shareholder of famous auction house Sotheby’s which was helping him sells his art at the time. And no one seems to want to look further into this heavily suspect case of price manipulation.
One of the most high-profile and active art collectors of these past few years is the notorious Steven A. Cohen, the 72nd richest person in the world according to Forbes’ Sep. 2016 ratings. A highly successful hedge fund manager, Mr Cohen has attracted as much admiration as controversy over his decades of activity in the financial world. Like most very successful people in the business, Mr Cohen has taken to collecting art and makes colossal profit in the buying and reselling of major artworks — in his case, often through Sotheby’s.
Like most very successful people in the business, he owns shares in many businesses via somewhat obscure structures, and it’s not always crystal-clear what assets he controls at any given time — and that, unfortunately, sounds terribly familiar: Mr Cohen has been in big trouble with the law in the past. In this case, the unnerving fact is that Mr Cohen was both a client of Sotheby’s and one of its shareholders, which sounds like the art market’s equivalent of insider trading (a practice his former hedge fund SAC Capital Advisors was charged for and pled guilty to in November 2013).
Steve Cohen controlled a varying amount of shares in Sotheby’s from 2008 to 2016 and according to a Bloomberg article published on May 17th, 2016, he used his family office Point 72 Asset Management to acquire 1.2 million shares in Sotheby’s in the first part of 2016, thereby bringing his total amount of shares in the company to 3.2 million. The shares were valued at US$ 86.1 million in March, 2016 and made Point 72 the 5th largest shareholder in Sotheby’s. The shares were sold later that year after their value had risen.
And here’s the problem: in 2009, at a time when he already controlled shares in Sotheby’s through SAC, Mr Cohen and his wife lent 20 masterpieces to the company for them to be shown in a seemingly disinterested exhibit. Hardly fortuitous, though: he was immediately suspected of having made this move to increase the value of the masterpieces at hand and helping them find buyers who would be ready to pay very high prices for the artwork on display (art by Edvard Munch, Andy Warhol or Pablo Picasso, for example). The move was blatant enough to attract criticism, but astonishingly, Mr Cohen was still able to pursue his dealings… How does this not constitute a suspect, if not obvious case of price manipulation? It’s very much a mystery that he hasn’t been more severely confronted on the subject.
The information on Point 72’s exact dealings with Sotheby’s came to the surface last year, even though up to late 2013 Steve Cohen had been under crushing pressure from the US authorities and criminal charges had been pressed against his former hedge fund SAC Capital. The US managed to have the hedge fund closed, but Mr Cohen escaped the charges through a US$ 1.2 billion settlement. US Attorney Preet Bharara, who led the case, was quoted as saying SAC had set up a “culture of corporate corruption” and called it “a magnet for market cheaters”. Yet in a depressingly easy manner, Steven Cohen paid his way out of the problem, and that was it. It seems he won’t even have to go to the same trouble for having been a client, a shareholder and a benefactor of Sotheby’s at the same time.
