Cohen secretly bought the masterpiece from Las Vegas casino mogul Steve Wynn, who famously put his elbow through the 1932 painting of Picasso’s mistress, creating a six-inch tear.
The price is estimated to be the highest ever paid for an artwork by a U.S. collector – and it’s even more impressive because Wynn had previously agreed to sell the masterpiece to Cohen for $139 million in 2006, but accidentally tore the painting the following day.
It reaped a hefty profit for Wynn, who also got a $45 million insurance payout after he elbowed the painting while showing it off to friends, including the late Nora Ephron, at his Las Vegas office.
Wynn, who suffers from vision problems, agreed at the time to release Cohen from the sale and repair it. Now he has sold it to Cohen for $16 million more than the pre-damage price.
Manhattan federal Judge Victor Marrero balked at the agreement between the SEC and Cohen’s SAC Capital that allows the firm to pay a $602 million fine without admitting or denying guilt.
“It seems counter-intuitive and incongruous to settle a case for $600 million that might cost $1 million to litigate,” Marrero said. “How believable is it to the public the claim that they did nothing wrong?”
Cohen, 57, is a legend on Wall Street, having amassed a multibillion-dollar fortune by posting phenomenal investment returns averaging about 30 percent over the last two decades. Starting with a $25 million grubstake, SAC now manages about $13 billion and has 900 employees across the globe.
On Nov. 20, 2012, U.S. Attorney Preet Bharara’s office charged former SAC Capital portfolio manager Mathew Martoma in a $276 million insider trading case, the largest of its kind.
The alleged nefarious trading took place in shares of biotech stocks Elan and Wyeth in July 2008 ahead of the release of key clinical trial data. The government alleges that Martoma was given inside information from a renowned University of Michigan neurologist who served as the chairman of the safety monitoring committee overseeing the clinical trial of an Alzheimer’s drug the two companies were developing.
The indictment was stunning not only because of the enormous dollar amount attached to the scheme, but also because it repeatedly referred to Cohen. Although Cohen was not charged, the evidence suggests that Cohen participated in trades that the government says illegally used insider information – though prosecutors have not said that Cohen himself knew the information was confidential.
According to the government, Cohen himself made substantial profits and avoided large losses in his own trading book as a result of illegal insider tips. What was not clear, however, was if Cohen was aware that the trader who provided the stock recommendations possessed inside information. He could have potentially traded on tips that were obtained illegally without actually being aware of it.
Cohen’s new Picasso will join an already impressive art collection which also includes work by Warhol and Cézanne.
News of Cohen’s art purchase comes as yet another SAC employee has been arrested. The FBI says portfolio manager Michael Steinberg was arrested at 6 a.m. on March 29 at his home in New York City. It declined to specify the charges.
His attorney said in a statement that Steinberg “did absolutely nothing wrong.” Attorney Barry H. Berke says Steinberg was “caught in the crossfire of aggressive investigations” into other people’s activities.
At least four other people associated with the Stamford, Conn.-based firm have been arrested over a period of about four years.
According to businessinsider.com, friends and former colleagues said Steinberg is amicable and well-liked. One friend described him as a “mensch,” according to people familiar with him who asked not to be identified.
Together with three other hedge-fund managers, he started Natan, a network of young philanthropists who hold events to promote Jewish culture and Israel, according to its Website. He lives in Manhattan in a Park Avenue apartment, which he bought for $8 million in 2009, according to Streeteasy.com.”