The SAC Capital Scandal–Made For TV

    The SAC Capital Advisors insider-trading scandal has inspired an episode of the fictional television program “Person of Interest.” The show features a plotline that was probably taken from recent media headlines about SAC Capital, but we might humbly suggest that the show instead feature a plotline that DeepCapture published more than three years ago.

    The CBS crime drama told the tale of insider-trading at a hedge fund called “VAC Capital,” a clear reference to SAC Capital, and just as the real SAC trader Mathew Martoma has been accused of earning for SAC Capital a massive sum ($276 million) from trading on tips about Alzheimer’s drug trials that he received from a University of Michigan professor, so too does the VAC trader turn a massive profit (inflated to $500 million for the purposes of television titillation) from an inside tip. However, readers of DeepCapture might recall that the full (true) story is a lot worse than just that.

    In 2009, DeepCapture published a book-length story (“Michael Milken, 60,000 Deaths, and The Story of Dendreon”) demonstrating that Milken had worked with “captured” doctors to derail FDA approval for a promising cancer treatment while promoting less-than promising treatments from which they stood to profit. That story also demonstrated that there was a high probability that a small group of hedge funds, including SAC Capital, had not just traded on inside information about the FDA’s decisions, but had perpetrated manipulative short selling attacks on the stock of the company, Dendreon, that was manufacturing the promising cancer treatment.

    I am no TV producer, but it seems to me that Wall Street miscreants trying to destroy companies with promising medical treatments (i.e. killing people, which is exactly what they are doing) is better television than miscreants merely “making a killing” on inside information. Or maybe not. It could be that the old narrative of Gordon Gecko, the greedy but charming rogue scoring the big bucks from his clever reading of inside information, is what people want to see on their TV screens—not the far uglier truth. Even the major U.S. news organizations seem intent upon portraying SAC Capital’s insider traders not as destructive miscreants, but as basically harmless rogues, perhaps even worthy of our respect and admiration.

    During the three years while hedge funds were attacking Dendreon’s stock price and Milken was successfully scheming with FDA doctors to derail Dendreon’s cancer treatment (more specifically, a treatment for prostate cancer), more than 60,000 men who would have benefited from that treatment instead died before their time. In fact, Wall Street miscreants nearly destroyed Dendreon, but thanks largely to citizen activists (and not the media) who exposed the corruption that led to the FDA initially denying approval to Dendreon’s cancer treatment, the FDA did (albeit three years too late) finally approve the drug–so maybe it was a Hollywood ending, after all.

    Either way, Wall Street miscreants are attacking many other companies with promising medical treatments…and nobody (aside from a few citizen activists) is watching.

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    - who has written 87 posts on Deep Capture.


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    16 Responses to “The SAC Capital Scandal–Made For TV”

    1. Anonymous says:

      The founder of SAC Capital is up against RICO, common law fraud and breach of fiduciary duty charges made by his exwife again because a federal appeals court ruled in her favor.
      http://www.bloomberg.com/news/2013-04-03/steven-cohen-s-ex-wife-has-her-suit-against-him-reinsted.html

    2. Anonymous says:

      SAC Capital May Have Lost $196 Million on Paper in Dendreon Stock Plunge

      By Saijel Kishan and Katherine Burton – Aug 4, 2011

      SAC Capital Advisors LP, the $14 billion hedge fund run by billionaire Steven A. Cohen, may have a one-day paper loss of about $196 million from its stake in Dendreon Corp. (DNDN), the drugmaker that plunged the most ever after it withdrew its 2011 revenue estimate.

      SAC Capital owned 8.2 million shares of Seattle-based Dendreon as of March 31, making it the biggest shareholder, according to a regulatory filing. Dendreon fell 67 percent, or $23.87, to $11.97 at 3:15 p.m. New York time in Nasdaq Stock Market trading, the largest decline since its initial public offering in June 2000.

      Chief Executive Officer Mitchell Gold said in a statement yesterday that the company was educating doctors about prostate- cancer drug Provenge and a decision last month by the U.S. Medicare and Medicaid program to pay for the $93,000 treatment. Billionaire George Soros, who last week told clients he will be return their money, also had a stake in Dendreon.

      SAC Capital’s CR Intrinsic unit held 625,000 shares of Dendreon as of the end of the first quarter, according to a filing. Jonathan Gasthalter, a spokesman for the Stamford, Connecticut-based hedge fund, declined to comment.

      Soros Fund Management LLC in New York held 4.7 million shares as of March 31, according to filings. Citadel LLC, Balyasny Asset Management LP, both in Chicago, and Millennium Management LLC, Healthcor Management LP and Visium Asset Management in New York were among the hedge funds that also owned Dendreon stock, according to filings.

      Revenue Forecast

      Dendreon previously estimated annual revenue of $350 million to $400 million. The company believes the market size for Provenge is substantial, though it expects only modest increases in sales each quarter for the remainder of the year, Gold said in the statement.

      The main stumbling block for Provenge is the lack of knowledge about insurance coverage, he said. The Centers for Medicare & Medicaid Services issued a final ruling in June saying the $93,000 treatment is “reasonable and necessary” for men with advanced prostate tumors resistant to hormone therapy who have minimal or no symptoms.

      The agency’s decision “will have a significant impact on increased physician adoption,” Gold said in the statement. “However, we believe this will take time, and for the remainder of 2011, the launch trajectory will reflect a more gradual adoption of Provenge as physicians gain confidence in this positive reimbursement landscape.”

      $48 Million Sales

      Provenge, the first approved therapy that trains the body’s immune system to attack cancer cells as if they were a virus, generated $48 million last year. Analysts surveyed by Bloomberg expected revenue to reach $370 million this year if the company boosts its capacity by expanding a New Jersey plant and adding new manufacturing sites in Los Angeles and Atlanta.

      Instead, the drugmaker will reduce its expenses and eliminate positions to meet the lower demand for the product, Gold said yesterday. The company didn’t specify how many jobs would be lost.

      To contact the reporters on this story: Saijel Kishan in New York at skishan@bloomberg.net; Katherine Burton in New York at kburton@bloomberg.net

      To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

    3. Anonymous says:

      “That story also demonstrated that there was a high probability that a small group of hedge funds, including SAC Capital, had not just traded on inside information about the FDA’s decisions, but had perpetrated manipulative short selling attacks on the stock of the company, Dendreon, that was manufacturing the promising cancer treatment.”

      SAC was long Dendreon in a big way. Get your facts straight before someone else sues you.

    4. sean says:

      Cary, Jodi, Marcia…. J.A.I.L.

    5. Anonymous says:

      SAC Capital won’t fully cooperate with government: letter

      By Emily Flitter and Katya Wachtel
      NEW YORK | Fri May 17, 2013 6:04pm EDT

      http://www.reuters.com/article/2013/05/17/us-sac-letter-investigation-idUSBRE94G0UC20130517?feedType=RSS&feedName=topNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=992637

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