Black Edge summary

Within 14 years, Cohen moved from being a lowly junior trader to a revered Wall Street personality. It would only be a matter of time before he wished to break free of Gruntal and venture out on his own.

So it was that in 1992, Cohen founded his own investment firm, SAC Capital Advisors, using his own initials for the company name. It was a hedge fund that profited by investing money gathered from different individuals and institutions.

By the mid-2000s, Cohen was one of the richest men in the world. He had a personal fortune of nearly $10 billion. He allowed himself a few luxuries with this cash, and often splurged on expensive artwork.

But something seemed off. SAC’s huge profits seemed just too good to be true, and there simply had to be something shady going on.

Almost 5 million people have Alzheimer’s disease in the United States alone. The disease causes severe memory loss and, unfortunately, no effective treatment has been discovered.

A breakthrough in this regard could potentially result in millions of dollars in profits, so any development is sure to attract Wall Street’s attention.

SAC’s business model was heavily and clearly based on insider trading.

Even so, in the late 2000s, insider trading was common practice at Wall Street hedge funds. Unlike closely monitored big banks, the relatively new hedge funds operated below the radar of the regulators and could get away with murder.

Once the Wall Street Journal had revealed what the FBI and SEC were up to, the authorities had no choice but to move quickly. Otherwise, they ran the risk of Wall Street traders destroying all evidence of insider trading before they could get to it.

Just a few months later, in May 2011, US authorities had their first breakthrough, and placed Mathew Martoma and Dr. Sidney Gilman on their suspect list.

When, in 2011, FBI agents pulled up in front of Mathew Martoma’s house, they had strong suspicions but no actual evidence of insider trading. In those circumstances, all they could do was ask questions and chip away at his resolve.

However, a year later, that had changed. This time, when the agents arrived for the second time, they weren't there to shoot the breeze. They arrested him on the spot.

Finally, there was another development in the case. The SEC got their hands on an email that potentially connected Cohen to another case of insider trading at SAC.

In the summer of 2008, Mike Steinberg, an SAC trader, received inside information about the computer company Dell’s disappointing business figures, which weren’t yet public. Steinberg used the information to bet that Dell’s stock price would drop, and when it did, he netted a cool $1.4 million. It was an email that Steinberg had sent to Cohen about this information that the SEC now had in its possession.