SAC May Be Too Calm As It Carries On

 SAC May Be Too Calm As It Carries On

THE PR VERDICT: “C” (Distinctly OK) for SAC capital and its business as usual PR tactic.

Keep calm and carry on. In the world of crisis PR, that British wartime slogan is the standard mantra, but Steve Cohen, founder of beleaguered hedge fund SAC Capital, seems to be taking it to heart. The hedge fund, center of a long-running investigation into insider-trading, was in the headlines again last week when one of Cohen’s key lieutenants was arrested. The news capped a week of astonishing headlines.

As arrests mount and a $600 million penalty to settle some civil claims is in the works, founder Cohen’s PR response has been to carry on as normal. But what is normal for one of the world’s largest and most successful hedge funds? A spending spree to change the mood.

Three items made the news: the purchases of a Picasso painting for a cool $155 million, and of oceanfront property in East Hampton for $60 Million. Then throw in the sale of a Manhattan condo for $115 million and it’s clear that at SAC, the recent headlines are not putting the firm into crisis. They’re distracting, yes, but apparently, the show must go on.

THE PR VERDICT: “C” (Distinctly OK) for SAC capital and its business-as-usual PR tactic.

THE PR TAKEAWAY: Chutzpah has its merits – until it strays into willful arrogance. There is some wisdom in brazenly continuing with a business-as-usual approach while others might describe the sky as falling. Keeping calm and carrying on reassures investors, clients, and above all employees that this too will pass. In this case, however, SAC’s actions seem akin to thumbing their proverbial nose at authority. In a fight over potentially criminal allegations, SAC has less leverage than it thinks. This might be the moment to lay a little lower and not inflame prosecutors wanting their day in the sun.

Being a Libor-Tease with the New York Times

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The PR Verdict: “D” (It’s a Dud) for the Department of Justice.

Don’t you hate a tease? The New York Times set the tone for this week’s Libor coverage with its weekend story that the Justice Department (and other regulators) is thinking about filing criminal charges against banks and individuals involved in Liborgate. “It’s hard to imagine a bigger case than Libor,” said one of the unnamed government officials. Golly! What’s next?

The news presumably sent a chill through banks and their senior management. We all know what happens when a firm faces criminal indictments: If true, things could get very ugly, and it’s normally over in a matter of hours. Just talk to Enron’s former auditors Arthur Andersen.

The Times article reported that the DoJ is building its case, though they hedged by saying this could take time. But since publication two days ago, the Libor waters have been further muddied. Did the Bank of England knowingly overlook rate fixing? And what did the US Federal Reserve know? Talking about a criminal prosecution, even unofficially to The New York Times, might have been a little premature. The facts are not so simple and there is enough blame to go around, including even possibly some regulators. In the end, the Justice Department may not be able to prosecute. That’s one story that won’t help the weakened PR image of law enforcement.

The PR Verdict:  “D” (It’s a Dud) for the Department of Justice. This might do more PR damage than good, if not followed through.

The PR Takeaway: Crying wolf messes with your PR. With a public increasingly incredulous that no big name is behind bars following the financial crisis, there is certainly PR mileage in saying”This time around, someone is going to stand trial.” But unless it’s a certainty, this is one headline that should have been delayed until a criminal prosecution was given the all clear. A disgruntled public, suspicious of the cozy relationship between regulators and Wall Street, might find yet again that hefty fines and civil charges are they only penatlies ultimately on offer. Failing to press charges won’t help the PR image of independent enforcement and regulation. Next time, why not pause before making the splashy unofficial announcement?

Is the Department of Justice being a big Libor-tease? Give us your PR Verdict!

Full Steam Ahead for DSK!

DSKcrosssue 300x187 Full Steam Ahead for DSK!

The PR Verdict: “C” for DSK and his team.

Full steam ahead for Dominique Strauss-Kahn who is now countersuing Nafissatou Diallo, the housekeeper at the Manhattan hotel who last year accused him of rape.   He says her statements about him damaged his political career and cost him his job as managing director of the International Monetary Fund and “other professional opportunities”.  How much is that worth? DSK says a cool $1 million plus punitive damages.

His lawyers said Diallo was “directly responsible for his being arrested, imprisoned and subjected to extraordinary pain, anguish and expense.”  Batting back, a lawyer for Diallo countered, “Strauss-Kahn’s lawsuit is yet another publicity stunt, smacks of desperation and will be easily defeated.”

All of this against a backdrop of DSK being charged on separate matters, including a French allegation of involvement in a prostitution ring and an accusation of assaulting of a woman at a hotel in Washington in 2010.  He has denied wrongdoing on both counts.

The PR Verdict: “C” for DSK and his team.  Given unrelated allegations have surfaced after Diallo’s, demanding punitive damages from a hotel housekeeper seems heavy handed.

PR Takeaway: Outrage and fury work best when not mitigated by complicating facts.  DSK’s decision to sue might be for all the right reasons but with a prostitution charge hanging over his head, demanding a million dollar settlement from a hotel housekeeper is unlikely to rescue his reputation.  To make the same point go ahead and file, but in deference to the financial situation of Diallo, unsympathetic public opinion and some very compromising ongoing legal issues, sue for a nominal sum only.

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