Richard Lee’s first day of running a trading desk was his last.
The New York Times reports that in March 2008, hours after starting a new job at Citadel, Lee signed into the hedge fund’s accounting system and misstated the value of his holdings, according to people briefed on the matter.
That effort ultimately would have inflated Lee’s returns by about $4.5m. Citadel, based in Chicago, detected the misconduct and fired him the next morning.
Such a shady move would have blacklisted most traders from Wall Street, but Lee found a new home: SAC Capital Advisors, the hedge fund run by the billionaire stock picker Steven A. Cohen that federal prosecutors have called a 'magnet of market cheaters.' Although a Citadel employee and SAC’s legal department warned about Lee’s past, Cohen hired him anyway.
An examination of Lee’s hedge fund career underscores his importance to the government’s criminal insider-trading case against SAC. Federal authorities in Manhattan announced SAC’s indictment last week, an unusual, forceful action against a large company.
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