Tags: Cohen | earnings | fine | fund

CNBC: Steve Cohen's Earnings Likely to Exceed His Fine

By Dan Weil   |   Tuesday, 05 Nov 2013 08:39 AM

Steven Cohen, owner of hedge fund firm SAC Capital, will likely earn more this year than the $1.8 billion he agreed to pay in fines Monday related to insider trading charges, people close to SAC tell CNBC.

The sources said SAC's gross returns are about 25 percent so far this year.

The firm started the year with $15 billion in assets under management, including $9 billion from employees — mostly Cohen.

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While outside investors will have pulled all their capital out by year-end, SAC still earned plenty on their money while it was there.

SAC receives fees equal to 3 percent of outside assets and garners 50 percent of the profits on that money, CNBC reports.

The $9 billion that largely belongs to Cohen sits in a fund that has earned about 21 percent so far this year, according to CNBC.

Assuming that $8 billion of that amount is his, he would get $1.6 billion of that money. He also may receive $750 million from his outside investors (50 percent of the profit made by a 25 percent return on $6 billion).

Put that together and you have $2.35 billion, well exceeding his fine.

"Cohen's net worth, which recently peaked at $9.4 billion, will remain greater than $7 billion following the criminal settlement between SAC and the government," writes Nathan Vardi of Forbes.

"Cohen's ability to keep posting huge returns and compound his fortune in a big way annually, however, might be dealt a blow as he is forced to dismantle the expensive infrastructure at SAC that he clearly felt he needed to regularly score rich pay days."

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