[Photo: Bloomberg News]

 

"BLACK EDGE: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street”  - By Sheelah Kolhatkar

“Den of Thieves,” James B. Stewart’s groundbreaking narrative about insider trading, was published in 1991. It pulled back the curtain on a culture of corruption that pervaded high finance, bringing the reader inside the room of the most private meetings and discussions among the likes of famed arbitrageur Ivan Boesky and financier Michael Milken, as well as those prosecuting them, led by Rudy Giuliani. “Den of Thieves” crackled with memorable one-liners that became Wall Street lore. “Your bunny has a good nose” - code for a piece of illegal inside information that was accurate - quickly became a catchphrase.

In 2017, Sheelah Kolhatkar, a staff writer at The New Yorker, tries to present a modern-day version of “Den of Thieves,” this time with prosecutors focused on Steven A. Cohen, perhaps the most successful hedge fund investor of the modern era, who amassed wealth of some $13 billion.

• Her book is a richly reported, entertaining tale about the cat-and-mouse game between the government and Cohen - much of which played out in the news media - for the greater part of the last decade, if not longer.

• “Black Edge,” which at times reads like a thriller, is a fascinating look at Cohen, whom Kolhatkar portrays as an obsessive and ruthless investor.
• After he divorced his first wife, Kolhatkar reports, Cohen told his staff: “I just got ripped off by my wife. I’m going to make it all back by cutting your payouts.”

• Her book is also a deep examination of a culture within hedge funds that demanded employees find an “edge,” and seemingly continued to rely on illegal tips by insiders - information that was called “black edge” in Cohen’s firm - for far too long.

Of course, we know hos Kolhatkar’s tale ends - the government never brings a case against him. That reality, to some degree, gets in the way of an otherwise good story. Cohen is never proved guilty of breaking the law, despite a litany of circumstantial evidence presented by prosecutors and the author. The reader is left asking: Why not?

This book works, to the extent that it does, because Kolhatkar piles detail after detail upon one another. That’s how she gets a reader to feel like he or she is in the room. However, too much of the time the reader seems to be in the wrong room, and that’s a major problem.

The best insider fly-on-the-wall books work on 2 levels: They appeal to the layman with a passing interest in the subject because of the sheer drama of the story. But they also wow sophisticated insiders (excuse the wordplay) with new details that make them rethink what they knew about the topic. This book may work on the first level, but it doesn’t work on the second.