How long does it take to read Black Edge?

The reading time for Black Edge varies depending on the reader's speed. However, the Blinkist summary can be read in just 15 minutes.

Who is the author of Black Edge?

Sheelah Kolhatkar is the author of Black Edge.

Money & Investments

Black Edge Book Summary - Black Edge Book explained in key points

Listen to the Intro

00:00

Black Edge summary

Name: Black Edge
Rating: 4.4 (21 reviews)
Author: Sheelah Kolhatkar

Sheelah Kolhatkar

Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street

4.4 (21 ratings)

20 mins

Brief summary

Black Edge by Sheelah Kolhatkar is an insider's account of the biggest insider trading case in history, involving hedge fund billionaire Steve Cohen and his firm SAC Capital Advisors. It exposes the corrupt practices of Wall Street and the difficulty of bringing justice to those who operate above the law.

Topics

Biographies

Table of Contents

Black Edge
Summary of 8 key ideas

Audio & text in the Blinkist app

Key idea 1 of 8

What’s in it for me? Discover how Wall Street fat cat Steve Cohen got rich through illegal insider trading.

It’s common knowledge these days that Wall Street has a lot to answer for. After the events of the 2007-2008 financial crisis, one would hope that governments would crack down on the excesses at the heart of global finance.

Sadly, that simply has not been the case, and the injustice of this state of affairs is perfectly personified by Steve Cohen, a Wall Street investor who made billions of dollars by attaining a “black edge” over fellow investors.

Cohen procured illegal, or “black,” insider information about companies’ performances in order to gain an advantage over fellow investors. To the outside world, he was miraculously lucky, always betting on the right companies at the right time. In reality, as the investigative journalist Sheelah Kolhatkar discovered, he was almost certainly utilizing an unfair advantage to surpass his rivals.

In these blinks, you’ll learn

how the hedge fund Cohen founded systematically used illegal insider information to manipulate stock prices;
how a drug to help Alzheimer's patients made Cohen $273 million; and
why, after multiple criminal proceedings, Cohen has managed to remain a free man.

Steve Cohen was a talented trader and was blessed with early success, but faced charges of insider trading.

In 2008, in the midst of the worldwide financial crisis, US federal agents were in the process of taking down Raj Rajaratnam, a Wall Street titan, when they discovered something fascinating.

Rajaratnam was illegally using inside information from companies; he traded on this information and profited from it massively. The agents were intrigued at how one name kept cropping up during interviews with Wall Street insiders: Steve Cohen.

Was there an even larger case waiting to be uncovered? Rajaratnam, it turned out, was small fry – the investigation was only just getting started.

So who is Steve Cohen? Let’s start from the beginning.

Steve Cohen was born in 1956 and grew up in a middle-class family on Long Island, New York. From a young age, he was fascinated with finance.

As a student at the famous Wharton School at the University of Philadelphia, he read the Wall Street Journal every morning and followed the stock market. He was talented too: he played poker with his fellow students and made a lot of money doing so.

In 1978, fresh out of Wharton as a 21-year-old, he landed a job at Gruntal & Co., a New York brokerage firm. Even then, his skills shone through: in one afternoon, he made $4,000, a huge figure in 1978.

Cohen was successful, making $5 million to $10 million a year. But it didn’t take long for the first signs of wrongdoing to appear as he faced charges of insider trading.

In 1985, the Securities and Exchange Commission, or SEC, looked into Cohen’s transactions. Cohen had received inside information through a friend about an imminent takeover of electronics company RCA by General Electric. Cohen invested heavily in RCA shares and made $20 million in profits when the takeover was announced.

Even though the criminal case was later dropped, it strongly indicated Cohen had a somewhat unorthodox approach to trading.

Cohen built up his own investment firm, SAC Capital, which systematically sought inside information.

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.

SAC was accused of manipulating stock prices and a culture of seeking inside information became embedded.

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.

In 2008, SAC used research into Alzheimer’s to benefit in massive insider trading.

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.

By the late 2000s, the US regulatory authorities began to hone in on insider trading.

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.

In 2011, SAC trader Mathew Martoma and Dr. Sidney Gilman came to the attention of US authorities.

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.

In late 2012, Mathew Martoma was arrested and SAC paid a record fine to settle charges of insider trading.

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.

SAC agreed to pay another fine and Martoma was sentenced to prison – but Cohen walked free.

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.

Want to see all full key ideas from Black Edge?

Key ideas in Black Edge

More knowledge in less time

Read or listen

Get the key ideas from nonfiction bestsellers in minutes, not hours.

Find your next read

Get book lists curated by experts and personalized recommendations.

Shortcasts ^New

We’ve teamed up with podcast creators to bring you key insights from podcasts.

What is Black Edge about?

Black Edge (2017) tells the real-life tale of greed and financial crime on Wall Street during the 2000s. It describes large-scale, illegal insider trading at SAC Capital Advisors, a hedge fund founded by star investor Steve Cohen. SAC maintained a culture of trading on inside information, but while some traders at SAC were convicted of insider trading, US authorities could never stop Steve Cohen himself from making his millions – and he was never convicted of any crime.

Black Edge Review

Black Edge (2017) by Sheelah Kolhatkar sheds light on the thrilling world of finance, where greed, power, and corruption collide. Here's why this book is worth your time:

With meticulous research and interviews, the book reveals the dark underbelly of insider trading, exposing a complex web of deceit and manipulation.
Through the riveting narrative, readers gain a deeper understanding of the legal and ethical implications of Wall Street's most notorious insider trading case.
Kolhatkar's compelling storytelling keeps readers hooked, ensuring that the fast-paced world of finance never feels dull or mundane.

Best quote from Black Edge

When it came to innovating financial crime, hedge funds were like Silicon Valley.

—Sheelah Kolhatkar

Who should read Black Edge?

Investors and analysts
Lawyers and investigators
The 99 percent who don’t benefit from Wall Street trading

About the Author

Sheelah Kolhatkar is a staff writer at the New Yorker. She has also written for the Atlantic, the New York Times and Time magazine. She is a public speaker and commentator on business, economics, Wall Street, regulation and financial crime. Before becoming a journalist, Kolhatkar was an analyst at two New York hedge funds.

Categories with Black Edge

Money & Investments Biography & Memoir

Book summaries like Black Edge

A Random Walk Down Wall Street

Burton G. Malkiel

The Time-Tested Strategy for Successful Investing

What We Should Know about the People We Don’t Know

21 min

3.9

The Intelligence Trap

David Robson

Why Smart People Make Dumb Mistakes

9 min

3.7

Reminiscences of a Stock Operator

Edwin Lefèvre

Step into the World of a Trading Legend

15 min

3.8

Thinking, Fast and Slow

Daniel Kahneman

Intuition or deliberation? Where you can (and can't) trust your brain

28 min

4.5

Reality Is Not What It Seems

Carlo Rovelli

The Journey to Quantum Gravity

16 min

4.5

Millennial Money

Patrick O’Shaughnessy

How Young Investors Can Build a Fortune

The Secret to Love That Lasts

20 min

4.5

The New Trading for a Living

Dr. Alexander Elder

Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management

How to free yourself from philosophical dogmas and assert your own values

A Beginner's Guide to Dropshipping – How to Make Money Online and Build Your Own Online Business

19 min

4.2

7 Strategies for Wealth & Happiness

Jim Rohn

Power Ideas from America's Foremost Business Philosopher

Twelve Classic Tales from the World of Wall Street

An uncommon guide to rapid fat-loss, incredible sex and becoming superhuman

The Decentralized Alternative to Central Banking

The Psychology of Persuasion

33 min

4.5

You Can Negotiate Anything

Herb Cohen

Anything you want, you got it

Your Guide to Superior Management Effectiveness

A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History

The Macedonian who conquered the world

Life without Free Will

Exploring Christianity's Deepest Questions

5 min

3.6

The Science of Storytelling

Will Storr

The scientific underpinnings of a good story

The Power of Introverts in a World that Can’t Stop Talking

How Stories Go Viral and Drive Major Economic Events

25 min

4.3

Easy Money

Ben McKenzie with Jacob Silverman

Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud

19 min

3.7

Your Money or Your Life

Vicki Robin and Joe Dominguez

9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence

26 min

4.2

Quit Like a Millionaire

Kristy Shen and Bryce Leung

No Gimmicks, Luck, or Trust Fund Required

The Art of Seeing Others Deeply and Being Deeply Seen

18 min

4.4

The Wealth of Nations

Adam Smith

The most influential economic book of all time

11 min

4.4

The Fifth Agreement

Don Miguel Ruiz and Don Jose Ruiz

A Practical Guide to Self-Mastery

China, Silicon Valley, and the New World Order

A Common Sense Guide to the Economy

Improve your life by only focusing on the essentials

20 min

4.5

China's Second Continent

Howard French

How a Million Migrants are Building a New Empire in Africa

17 min

3.8

Be the Unicorn

William Vanderbloemen

12 Data-Driven Habits That Separate the Best Leaders from the Rest

19 min

4.2

Snakes in Suits

Paul Babiak and Robert D. Hare

When Psychopaths Go to Work

19 min

4.1

The Man Who Solved the Market

Gregory Zuckerman

How Jim Simons Launched the Quant Revolution

A Guide to Healing Intergenerational Trauma

5 min

3.1

Rich Dad’s Cashflow Quadrant

Robert T. Kiyosaki with Sharon L. Lechter

Guide to Financial Freedom

26 min

4.6

Your Brain Is Always Listening

Daniel G. Amen

Tame the Hidden Dragons That Control Your Happiness, Habits, and Hang-Ups

22 min

4.2

Barbarians at the Gate

Bryan Burrough

The Fall of RJR Nabisco

19 min

4.1

The Speed of Trust

Stephen M.R. Covey with Rebecca R. Merrill

The One Thing That Changes Everything

Taoist Philosophy for Peace, Contentment & Balance in Life

16 min

4.2

The Art of Clear Thinking

Hasard Lee

A Stealth Fighter Pilot's Timeless Rules for Making Tough Decisions

12 min

3.8

Skin in the Game

Nassim Nicholas Taleb

Hidden Asymmetries in Daily Life

18 min

4.1

Man’s Search for Meaning

Viktor Frankl

The harrowing experiences of the author in a concentration camp

17 min

4.4

The Geometry of Wealth

Brian Portnoy

How to Shape a Life of Money and Meaning

21 min

4.2

Investing With Impact

Jeremy K. Balkin

Why Finance is a Force for Good

Jumpstart Your Income, Your Life, Your Success

9 min

4.3

People ❤️ Blinkist

Sven O.

It's highly addictive to get core insights on personally relevant topics without repetition or triviality. Added to that the apps ability to suggest kindred interests opens up a foundation of knowledge.

Thi Viet Quynh N.

Great app. Good selection of book summaries you can read or listen to while commuting. Instead of scrolling through your social media news feed, this is a much better way to spend your spare time in my opinion.

Jonathan A.

Life changing. The concept of being able to grasp a book's main point in such a short time truly opens multiple opportunities to grow every area of your life at a faster rate.

Renee D.

Great app. Addicting. Perfect for wait times, morning coffee, evening before bed. Extremely well written, thorough, easy to use.