Steven Cohen's Picasso: After Insider Trading Payout, Hedge Fund Billionaire Spends $155 Million On Masterpiece

It did not take long for Steven Cohen, the billionaire behind SAC Capital, to get over his $600 million payout to the Securities and Exchange Commission (SEC). Not even two weeks after the hedge-fund manager settled over insider trading allegations, the 117th richest man in the world purchased a famous Picasso painting. The price tag on the masterpiece? A whopping $155 million.

According to The New York Post's anonymous source:

“Steve bought ‘Le Rêve’ as a gift to himself. This was supposed to be a top- secret sale because of the government investigation and settlement.”

Well, the sale was not so secret now, and neither is the backstory behind Cohen's recent acquisition. He attempted to buy the Picasso in 2006 from fellow billionaire and casino mogul Steve Wynn. But Wynn accidentally put his elbow through the canvas while showing it off to some pals, Nora Ephron famously reported in a blog for The Huffington Post. The Three Stooges-esque snafu resulted in about $45 million in damage and the loss of a sale to Cohen.

Christopher Burge, chairman of Christie's (L), starts the bidding for Pablo Picasso's painting, 'Le Reve', 10 November in New York at an auction of the collection of Victor and Sally Ganz. The painting, one of 58 pieces of 20th century art offered for sale, was bought for 48 million USD by an unidentified bidder. (STAN HONDA/AFP/Getty Images)

Fast forward to 2013 and Wynn, who originally paid $48 million for the famed painting, not only sold the Picasso to Cohen but he made a hefty profit along the way. The original asking price from 2006 jumped from $139 million to $155 million, according to New York Magazine. (Note to future collectors: When a Vegas hot-shot puts their appendage through a work of art, the value of the piece might just increase if you wait it out.)

In case you were interested in the rest of Cohen's illustrious art collection, the billionaire investor has also laid down big bucks for works like Edvard Munch’s "Madonna" ($11 million), Damien Hirst’s "The Physical Impossibility of Death in the Mind of Someone Living" ($8 million), Willem de Kooning’s "Woman III" ($137 million), Andy Warhol’s "Turquoise Marilyn" ($80 million), and Jasper Johns' "Flag" ($110 million). He also recently donated works by Cy Twombly and Martin Kippenberger to the Museum of Modern Art's permanent collection, the New York Times reports.

Sometimes retail therapy works, we suppose.

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Government Drops Insider Trading Probe Of Media Companies, Baffling Investors

The dismissal of an investigation into major media companies suspected of giving clients a sneak peek at crucial data drew great surprise on Wall Street, where traders make their living profiting from blips of information moving at the speed of light.

Federal authorities had been pursuing allegations that various media companies -- including Bloomberg LP, Thomson Reuters and Dow Jones and Co. -- leaked key economic data to select investors, the Wall Street Journal reported Monday. But the investigators dropped the probe, according to the paper, in part because they could not conclusively determine that investors were able to use the advance look at the numbers to extract profits.

Wall Street analysts pronounced that explanation baffling, noting that in modern markets -- fueled by high-frequency trading and robotic transactions -- a mere fraction of a second can be enough to execute trades worth billions of dollars.

“We have certainly reached a point where information advantage in millisseconds, possibly microseconds, definitely means a difference,” said Zach Ziliak, an attorney at law firm Mayer Brown in Chicago, which advises clients on issues surrounding high-frequency trading. “The millions that have been invested in microwave communication between New York and Chicago is a testament to the fact that firms expect to make a profit on informational advantages measured in microseconds.”

It’s difficult to determine how much such an edge could mean in dollars and cents. But the meltdown suffered in August of last year by market-maker Knight Capital offers an example that helps illustrate how quickly firms relying on algorithmic trading can make or lose money: When a trading algorithm went awry, the company burned through $440 million in just over 45 minutes.

According to the Journal, federal investigators were trying to determine if the news outlets were taking unemployment and economic data provided to them by the Bureau of Labor Statistics and sending it off to clients a few milliseconds before they were allowed to publish the information.

The BLS provides a select group of news agencies with sensitive statistics every month in advance of its legal 8:30 a.m. issue time, allowing reporters to write articles to coincide with the data's public release. But news agencies are forbidden from breaking the embargo, lest the information be used by capital markets traders to gain an edge on competitors.

Spokesmen for two of the companies named in the report, Dow Jones and Reuters, told The Huffington Post they were not aware of an ongoing federal investigation. Ty Trippet, a spokesman for Bloomberg, said that upon noticing some shortfalls in the way the government was securing data in 2012, the news organization "suggested solutions to secure their system and they thanked us for alerting them to the issue."

According to the Journal’s report, the government couldn’t link patterns seen in trading to specific actions by the media companies, and, equally important, didn’t feel it “could prove in court that a time advantage for a trader of a sliver of a second -- as little as a few thousandths -- was enough to conduct profitable trades on confidential information.”

"I don’t know how they could argue that having the information out a second before couldn’t make a difference," said Jason Roberts, a software consultant in Los Angeles who spent most of the past decade building trading systems. "It's like saying you don’t know how much speed is a part of the NFL."

“It’s absolutely amazing they would say that because we've shown it a million times over to be true,” said Eric Scott Hunsader, founder and CEO of market research firm Nanex, which has developed specialty software that can look at market activity at the microsecond level.

Hunsader also points to the behavior of the trading tape in markets for equity futures and Eurodollar options throughout 2011 as evidence that select firms were given statistical data in advance of the official release time. It's “obvious as night and day,” he said, that such activity occurred.

It's not only people with roots in Wall Street trading floors who saw the government's reported explanation for dropping its probe as suspect.

“Seconds now matter, and the incentives are there," said Keith Hall, who was a commissioner at the BLS from 2007 through early 2012 and is now a senior research fellow at George Mason University’s Mercatus Center. For Hall, the issue goes deeper than the fact that traders might be making money off insider information. He believes it puts into question the integrity of at least part of the federal government.

“This data belongs to the American public. Taxpayers have paid a lot” to have it collected, he said. “And it’s a real problem if the government is making this information available to some before others -- even if accidentally -- and they’re profiting from it.”

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Joseph Tartaro, Longtime Gun-Rights Insider, Argues Against Feinstein Assault-Weapons Ban

On the day that Sen. Dianne Feinstein (D-Calif.) introduced legislation that would ban more than 150 types of guns and some high-capacity magazines, Joseph Tartaro, a prominent gun-rights advocate and the head of the Second Amendment Foundation, told The Huffington Post why he opposed it.

Speaking on the phone from his office in Buffalo, N.Y., Tartaro scanned the list of guns that would be prohibited by the legislation, and described one of them -- a 9mm handgun that can accept more than 10 rounds of ammunition at a time -- as one of the "most commonly used modern handguns for self protection."

"Her proposal is geared toward getting rid of a lot of commonly held guns, not just assault weapons," he said.

Yet even if the ban covered a narrower range of weapons, Tartaro would still likely oppose it, he said. "The whole concept of these bans is that they affect the law-abiding -- not the criminals."

The Second Amendment Foundation is one of the smaller players in the gun-rights community, at least when compared with the National Rifle Association and, to a lesser extent, the National Shooting Sports Foundation, a trade association that happens to be based in Newtown, Conn.

But while many in the firearms industry have held the media at arm's length, especially in recent weeks, Tartaro has offered up his views on the unfolding gun debate for public consumption, providing an unusual opportunity to watch the debate play out from the perspective of seasoned gun-rights veteran.

Like many in the gun community, he supports tougher penalties for people who trade in illegal guns, but he's against the idea of a registration system that would make it easier for the government to keep track of those weapons. "It smacks a little bit of the Third Reich to me," he said.

Tartaro also shares the gun community's prevailing view of high-capacity ammunition.

He's for it, in other words, and believes it can be useful for self-defense. Yet he conceded that 10-round magazines "probably would satisfy a lot of needs."

Although many younger arrivals to the gun-rights scene are primarily interested in self-defense, Tartaro traces his activism to a time when the community was mostly made up of hunters and recreational target-shooters. Tartaro described himself as a decent bulls-eye shooter -- "I was never much above mediocre, " he said. With his deep smoker's voice and thick, white mustache, he seems to fit the image of the gun community's old guard.

Among the hunters and sportsmen who make up that shrinking subgroup of the gun-buying public, opposition to an assault weapons ban is far from universal. One hunter who doesn't share Tartaro's views in Joel T. Faxon, the police commissioner of Newtown, Conn., who in 2011 led an unsuccessful effort to pass an ordinance that would have restricted people from shooting their assault weapons in the woods around town.

"I am a gun owner," Faxon told The Huffington Post, "and I firmly believe that our children's safety takes precedence over unlimited access to firearms. Limits on assault weapons and high capacity magazines are a no-brainer."

Tartaro questioned the idea that all gun owners should have to abide by the preferences of people like Faxon. "I guess what they're saying is, 'I never go over 60 miles an hour, so why should there be a car that goes 80?'"

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