Sheelah Kolhatkar is a staff writer at The New Yorker, and the author of the new book Black Edge: Inside Information, Dirty Money, And The Quest To Bring Down The Most Wanted Man On Wall Street. From the transcript of her Q&A with Fresh Air's Dave Davies:
DAVE DAVIES: Well, Sheelah Kolhatkar, welcome to FRESH AIR. First, tell us about this guy, Steve Cohen. What made him distinctive and unique?--Marshal Zeringue
SHEELAH KOLHATKAR: Well, Steve Cohen is a legendary figure on Wall Street, largely for his prowess as a trader. So he made billions of dollars, one of the largest fortunes in the United States, almost completely on the basis of his ability to sort of sit in his chair, look at the market screens and trade based on his gut and what he saw was going on. And, you know, he has the lifestyle to reflect all that. He lives in a 36,000-square-foot house in Greenwich, Conn. There's an ice rink and a Zamboni for the ice rink. He decorates his office and his home with artwork of the sort you'd expect to see in the Museum of Modern Art.
And, you know, he really has a sort of rags-to-riches story that people in the financial world love. He grew up very middle-class in Long Island. They were certainly not poor, but they were not wealthy. And I think that growing up, he was surrounded by a lot of affluence in Great Neck. And he was motivated early on to make money. He was a very, very talented poker player in high school. And then he went off to Wharton, studied business there. And then he launched his hedge fund, SAC Capital, in 1992 with $25 million and very quickly achieved enormous success.
DAVIES: There are a lot of jobs in the financial sector, and it's confusing to people. There are bond traders and stock traders and people who are in - work for investment banks and private equity people. Steve Cohen made his fortune with a hedge fund. What is a hedge fund?
KOLHATKAR: Hedge funds were originally conceived as these very sort of bespoke products that catered to wealthy investors. So if you were a very rich person, you know, a CEO of a company, you had a vast fortune, you were trying to figure out how to manage all that money, you might have parked a slice of it in a hedge fund where the idea was that it would be...[read on]