Reuters - Video

Edition: US | UK | IN | CN | JP

Finance Videos

Breakingviews: The dangerous edge

Wednesday, August 07, 2013 - 03:40

Aug 7-Hedge fund manager Steven Cohen and baseball star Alex Rodriguez face sanctions for alleged use of an illegal “edge.” Rob Cox and Breakingviews editors discuss what the two cases have in common.

▲ Hide Transcript

View Transcript

So it's summer season so it's time to think about baseball and some strange analogies here breaking -- -- one of them. Ran holdings taken a look at which is basically weather Stevie Cohen. Is the -- of Wall Street. Explain we have two of the biggest stars in the respect. -- obviously baseball Steve Cohen hedge funds and an all right let's just for those of might be say in another country. -- routes and Rodriguez the third baseman for the New York Yankees star player one of the best players ever. Two days but has had a rough -- JP has haven't had a rough patch he's been accused of seeking and it should. In his case the edges perhaps this is -- that the allegations are. Steroids and performance it. Performance enhancing substances. Steve Cohen accusation is so strong that the Major -- been suspended for 211 negates the games he's fighting that suspension saying where's the evidence -- got to prove it I'm not just gonna take it and walk -- that in context he's paid how -- -- year. He's paid gobble it varies somewhere between 25 and thirty million dollars raised at a ten year contract for 275 million dollars so the Yankees don't have to pay that country while Wally says. Suspended they don't have to pay which they probably kind of like sensitive you know got to get under certain threshold and it gets complicated right tables in Major League Baseball many of Steve Cohen. He hasn't been accused of anything other than failing to supervise employees who have pled guilty or but he tries to they try to count at at a -- seek adequate body. Because face -- two if -- is these these places if it's. Correct allegations prove. Proven now the other sanction that is by far he's he's so he could be far apart from the securities and he can manage his own money but he can't. He can't have a team and that's an Achilles and Yemen and other people's -- right. But it seems to me the factory here is you know these are their two stars highly competitive seeking an edge in the question is where do you draw the line. -- seeking a bit right securities laws are supposed to be you know let's -- markets -- -- we can draw any little investors with a big investors. But some people are just gonna be better at some people -- gonna have more information the question is. When that's good research wins it's good information across this lot isn't the issue is not the rules and you're saying and vote and your -- both cases -- it there are a little bit fussy. So this question of what constitutes getting an edge in research and due diligence that kind of thing you know an investment world which is an amnesty become one -- And in the in the A-Rod case I mean it's not all of them actually I mean it's -- -- line over the years is constantly moves. Move traditional supplements so went and ultimately go -- -- maybe give you too much of and it went with them but surely chasing up on stare choosing not stare he's like insider trading of baseball yes I mean that's clear but like insider trading it's you know we. What something less of what appeared just you know you're taking and nutritional supplement which is not an illegal substance right it is seven human growth hormone when his. He's been here -- has a good -- just nutritional supplement. But and you have two very strong fake powerful figures I mean you have a a a US attorney's office that's that a guy pre Ferraro wants. The race culture -- do something he's very ambitious and then you have but selling the Commissioner of Baseball lots of people legacy. He wants to get a -- -- Iran wants to get apparently wants to get -- right okay so we got baseball. Hedge funds and August. All combining unit in a brilliant story Byron -- thank you very much -- back and more breaking views. Tomorrow.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Breakingviews: The dangerous edge

Wednesday, August 07, 2013 - 03:40