By Jennifer Reingold, senior editor
FORTUNE -- The Robin Hood Foundation -- Wall Street's favorite charity -- was named, rather cheekily, for the lovable fictional character who stole from the rich to give to the poor. But with this week's news that Robin Hood board member Steven A. Cohen will pay a record $1.2 billion in fines due to insider trading at his 100%-owned firm SAC Capital Advisors, life is suddenly imitating reality in a rather uncomfortable way.
According to the plea, it turns out SAC did indeed steal from the rich by insider trading, gaining an unfair edge over other investors. Indirectly, it redistributed some of those gains to the poor, via the $256 million given away by the Steven A. and Alexandra M. Cohen Foundation over the last decade to the likes of Stamford Hospital, North Shore-LIJ Health System, NYU Medical Center, and, of course, the Robin Hood Foundation, to which Cohen has donated more than $80 million.
It's an awkward situation, to be sure -- accepting funds for good causes that may have come, in part, from ill-gotten gains is a moral dilemma at best. So what happens now? Does Cohen stay on his boards and continue to give away money -- which, despite its origins, can still help people? Does he step down and stop donating to avoid tainting these organizations with guilt by association with his firm? Or does he actually amp up his giving, much as Michael Milken -- who, unlike Cohen, was personally convicted of a felony -- did a few decades back in an effort to improve his image? So far, it sounds like option three; Cohen, in a statement, said: "The Cohens expect to continue to increase their charitable giving in future years, as they have over the past decade." A spokesperson for the Robin Hood Foundation told Fortune that "Steve Cohen is a valued and thoughtful member of Robin Hood's board, and his leadership and generosity over the past nine years has benefited countless New Yorkers in need. We are not asking him to step down, and we have no reason to believe that he will."
That could be good news for Cohen's biggest beneficiaries -- several of which, such as Brown University, where Cohen sits on the board of Trustees, and L.A.'s Museum of Contemporary Art, where Cohen is also a director -- didn't respond to requests for comment. Of those who did respond, none of them see a donor whose firm (not the individual himself) has pleaded guilty to a serious crime as embarrassing enough to warrant giving the money back or even changing the names on the entrance to a building.
Says Christopher Riendeau, senior vice president of fund development at Stanford Hospital, which has received millions from the Cohens and is now building a pediatric care center to be named after them: "We stand by their philanthropy. They've been extremely generous to this community." At New York University, which in February announced a $17 million gift from the Foundation to create a new research center for veterans' mental health issues, "we will be keeping the gift," says spokeswoman Lisa Greiner, and the name (the Cohen Veterans Center) will not change.
This is not the first time that a rich man with philanthropic leanings has ended up in legal hot water, of course. It takes only one visit to, say, the (Michael) Milken Institute or Gould Memorial Library (funded from the profits of 19th century robber baron Jay Gould) to remember that many of the country's most important cultural institutions were founded by businessmen with ethical or legal challenges.
Maybe that's why you don't see charity clawbacks like you do with bonuses these days; when it comes to philanthropy, at least someone wins.
Additional reporting by Marty Jones
A longstanding anomaly in American law gives federal prosecutors enormous power in deciding whether to punish a large corporation for the actions of even a single employee.
By Roger Parloff, senior editor
FORTUNE -- Hedge fund powerhouse SAC Capital Advisors, indicted Thursday for wire and securities fraud violations after six of its employees pleaded guilty to those charges, appears to have close to no legal defense to the charges it faces.
That's MOREJul 26, 2013 2:08 PM ET
Criminal charges against hedge fund are a backdoor way to end Steve Cohen's career.
FORTUNE -- When criminal charges were filed Thursday against the hedge fund SAC Capital, Preet Bharara, the U.S. Attorney for the Southern District of New York, held a press conference to announce the fruits of a years-long government investigation.
"SAC became, over time, a veritable magnet for market cheaters," Bharara told reporters. "That's why the institution, and MOREKatie Benner - Jul 26, 2013 7:01 AM ET
SEC files civil case against hedge fund titan.
FORTUNE -- Apparently teflon sometimes can melt in the heat.
The Securities and Exchange Commission today filed civil charges against hedge fund titan Steve Cohen, alleging that he failed to "reasonably supervise" two employees at his SAC Capital. The pair -- Mathew Martoma and Michael Steinberg -- both had been previously charged with insider trading.
"Hedge fund managers are responsible for exercising appropriate supervision over their employees MOREDan Primack - Jul 19, 2013 2:47 PM ET
A new arrest at an SAC fund brings the government closer to Steve Cohen's door. Now might be a good time to become a family office in order to avoid future scrutiny.
FORTUNE -- The past few days haven't been kind to Steve Cohen, founder of the mega-hedge fund SAC Capital.
On Thursday, a judge decided not to approve his firm's settlement of insider trading charges with the Securities and Exchange Commission.
A MOREKatie Benner - Mar 29, 2013 2:05 PM ET
Hedge fund affiliates of SAC Capital will pay more than $600 million.
FORTUNE -- Regulators announced Friday that affiliates of the hedge fund SAC Capital had settled insider trading charges for more than $600 million. While the amount is stunning -- with one settlement touted by the Securities and Exchange Commission as "the largest ever in an insider trading case" -- some believe that this could actually be a positive development for MOREKatie Benner - Mar 15, 2013 5:59 PM ET
After falling down hard in the run-up to the financial crisis, regulators are hoping to stage a comeback with a wide-ranging insider trading probe. But as investigators circle Steve Cohen and SAC Capital, the government risks losing what little crime-fighting credibility it has gained.
FORTUNE -- The public's desire to see someone, anyone, come down hard on Wall Street has been answered, not by Dodd Frank, but by U.S. attorney Preet Bharara and MOREKatie Benner - Jun 6, 2011 3:25 PM ET
The government investigation of Steve Cohen's firm has reportedly prompted a well-known investor to put in a redemption request. Will more follow?
FORTUNE -- Last week I wrote that investors were standing by their man Steve Cohen, despite the fact that government investigators and a prominent Congressman were probing his hedge fund firm, SAC Capital.
While there's still no wave of redemptions, Institutional Investor broke the news that an investor wants out of MOREKatie Benner - May 31, 2011 7:37 AM ET
But do investigators have the juice to snag the man that they have been circling for years?
FORTUNE -- With a massive victory against hedge fund titan Raj Rajaratnam in the rearview mirror, it seems like the government has turned its attention to its next big target.
I'm not talking about the trial that begins today against Zvi Goffer, a former Galleon employee who allegedly ran an insider trading ring of his own.
I'm talking about MOREKatie Benner - May 16, 2011 11:42 AM ET
Fund managers make ridiculous sums of money for the most obvious stock pick in history: Apple. Is this the best Wall Street has to offer?
Blame for the credit crisis has been doled out liberally. Depending on your particular persuasion, it was all the fault of Wall Street, greedy homeowners, lazy ratings agencies, Chinese currency manipulators, bad regulation, bad regulators, or shady mortgage types. The cohort that hasn't gotten its fair MOREDuff McDonald, Contributing Editor - Feb 25, 2011 8:30 AM ET
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