Black Edge audiobook cover - Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street

Black Edge

Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street

Sheelah Kolhatkar

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Money & InvestmentsBiography & Memoir

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Black Edge
Early Career & Profile+
SAC Capital's 'Black Edge'+
The Alzheimer's Drug Scheme+
Federal Investigations+
Arrests & Legal Battles+
Outcomes & Aftermath+

Quiz — Test Your Understanding

Question 1 of 8
According to the book, what does the term 'black edge' refer to in the context of Steve Cohen's trading strategy?
  • A. A highly advanced algorithmic trading system that outpaces competitors.
  • B. Illegal insider information used to gain an unfair advantage in the stock market.
  • C. The strategy of aggressively betting against failing companies to manipulate their stock prices.
  • D. A legal loophole allowing hedge funds to completely avoid SEC oversight.
Question 2 of 8
How did SAC Capital change its hiring practices in the late 1990s to maintain its high profits?
  • A. It recruited primarily quantitative analysts to build predictive computer models.
  • B. It began hiring former SEC regulators to help navigate legal loopholes.
  • C. It sought out traders with a 'fundamental edge,' meaning deep personal connections in specific industries.
  • D. It only hired traders who had previously worked as executives at major pharmaceutical companies.
Question 3 of 8
In 2006, why did companies like Biovail and Fairfax accuse SAC Capital of market manipulation?
  • A. SAC was allegedly spreading false, negative reports to drive down their stock prices for short-selling profits.
  • B. SAC was accused of buying up all available shares to create an artificial monopoly.
  • C. SAC was bribing their executives to purposefully delay positive quarterly profit announcements.
  • D. SAC hacked into their internal databases to steal and publish confidential earnings reports.
Question 4 of 8
How did SAC Capital profit massively from the Alzheimer's drug trials for Bapineuzumab (bapi)?
  • A. They invested heavily right before the drug was approved by the FDA.
  • B. They stole the drug's patent and sold it to a rival pharmaceutical company.
  • C. Trader Mathew Martoma learned the drug was ineffective from a lead doctor, and SAC shorted the stocks before the public announcement.
  • D. Steve Cohen personally bribed the safety monitoring committee to approve the drug despite bad results.
Question 5 of 8
What security mechanism did Steve Cohen use to protect himself from being directly implicated in insider trading?
  • A. He routed all communications through encrypted servers in offshore tax havens.
  • B. He required analysts to rate potential trades on a scale from zero to ten, insulating himself from the specific sources of information.
  • C. He never executed trades under his own name, using a vast network of anonymous shell companies instead.
  • D. He forced all employees to sign strict non-disclosure agreements that legally prevented them from speaking to the FBI.
Question 6 of 8
What damaging information did investigators discover about Mathew Martoma's past that helped them build pressure on him?
  • A. He had previously been convicted of wire fraud in the late 1990s.
  • B. He had embezzled millions of dollars from his previous employer, Gruntal & Co.
  • C. He had forged his grades at Harvard Law School and subsequently changed his name.
  • D. He was secretly working as an informant for a rival Wall Street hedge fund.
Question 7 of 8
Why was the SEC ultimately unable to convict Steve Cohen using the incriminating email sent by Mike Steinberg regarding Dell's business figures?
  • A. The email was ruled inadmissible in court because it was obtained through an illegal wiretap.
  • B. Steinberg testified that he had completely fabricated the information in the email to impress Cohen.
  • C. Cohen's lawyers successfully argued that Cohen likely never read the email, as he received around 1,000 emails daily.
  • D. The email was heavily encrypted, and the FBI could not decipher its true contents before the statute of limitations expired.
Question 8 of 8
What was the ultimate outcome for Steve Cohen following the extensive FBI and SEC investigations into SAC Capital?
  • A. He was convicted of insider trading and sentenced to nine years in federal prison.
  • B. He was banned from the financial sector for life but managed to avoid prison time by paying a fine.
  • C. He was forced to dissolve his company entirely and return all profits to defrauded investors.
  • D. He avoided personal criminal conviction, rebranded his firm as Point72 Asset Management, and continued making billions.

Black Edge — Full Chapter Overview

Black Edge Summary & Overview

Black Edge (2017) tells the real-life tale of greed and financial crime on Wall Street during the 2000s. It describes large-scale, illegal insider trading at SAC Capital Advisors, a hedge fund founded by star investor Steve Cohen. SAC maintained a culture of trading on inside information, but while some traders at SAC were convicted of insider trading, US authorities could never stop Steve Cohen himself from making his millions – and he was never convicted of any crime.

Who Should Listen to Black Edge?

  • Investors and analysts
  • Lawyers and investigators
  • The 99 percent who don’t benefit from Wall Street trading

About the Author: Sheelah Kolhatkar

Sheelah Kolhatkar is a staff writer at the New Yorker. She has also written for the Atlantic, the New York Times and Time magazine. She is a public speaker and commentator on business, economics, Wall Street, regulation and financial crime. Before becoming a journalist, Kolhatkar was an analyst at two New York hedge funds.

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