Tax Reform in This Election Year: It's Not Likely
Which Credit Card Rewards Does the IRS Care About?Let me see if I've got this straight: former trader Andrew Tong is suing hedge fund giant SAC Capital Advisors LLC because his supervisor Ping Jiang ordered him to swallow estrogen pills and wear women's clothing in order to make him more feminine in order to become a more successful trader, according to The New York Post.
SAC vehemently denies Tong's allegations, which the Post says are being investigated by the Equal Employment Opportunity Commission. Tong also now claims he was sexually assaulted at work, a claim an S.A.C. flack told the newspaper was "scurrilous."
A couple of questions come to mind. First, why wouldn't Jiang just hire more women instead of making a man take female hormones? And could estrogen makes someone a savvier trader of stocks? None of it makes a lick of sense to me.
Wall Street's culture clearly isn't for the faint of heart. Sure, you can make tons of money, but the pressure to perform is enormous. People get chewed up and spit out at firms like S.A.C. fairly regularly. I have no idea whether the allegations against Tong are true, but I can tell you this isn't the first report of weird behavior among Wall Street's elite, and it won't be the last.
The SAC situation, though, could create more headaches for the hedge fund industry than just embarrassing tabloid headlines. Hedge funds and private equity firms have a serious image problem. Their power and influence seems to have mushroomed overnight, prompting some people, particularly in Congress, to wonder whether that's such a good thing.
Hedge funds and private equity companies are lobbying Congress with a vengeance to head off efforts to make them pay more taxes on the huge fees earned by their managers. Though the effort has slowed some lately, I believe this is a fight that the industry can't win in the long run. Americans admire rich people, but hate those they think earned their wealth through a tax loophole.
That's why Tong may soon find himself with a big fat check from SAC. Any cost to SAC honcho Steven A. Cohen pales in comparison with the price the firm and the rest of the industry is paying if the scandal continues to play out in The Post and the courts.
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