Steve Cohen P’08 P’16 is many things: Brown trustee, one of the 52 members of the Brown Corporation who run the University, founder and manager of the $10 billion hedge fund SAC Capital Advisors, 35th richest man in America, eccentric art collector. And now add this one to the list: accused enabler of insider trading, subject of a civil action from the Securities and Exchange Commission, with his hedge fund facing criminal charges that could bring the whole thing down.
Trouble with the law is nothing new for Cohen. Earlier this year, SAC shelled out over $600 million to settle an insider trading case — in a wild coincidence, this is almost exactly equal to Cohen’s annual salary. But this is the first time the SEC has gone after Cohen himself. It’s a nasty case, accusing Cohen of failing to supervise traders under him and effectively allowing insider trading to take place. At best, he’s been remarkably oblivious to what’s been going on at his own company. At worst, he’s enabled some pretty serious criminal activity.
Nevertheless, Cohen will continue to sit on an unaccountable, insider-run university corporation and make major decisions that affect thousands of students, faculty members and staff members, not to mention the entire city, because accountability doesn’t really exist for these people. SAC has been engaging in highly questionable practices for a long time, and the University has shown no interest in making Cohen answer for them.
But it’s not just about Cohen. The Corporation plays host to three billionaires, or four, if you’re generous. There’s Ronald Perelman P’90, the corporate raider who infamously fired his CFO for spending too much time away from work due to aiding his Alzheimer’s-afflicted wife. There’s Brian Moynihan ’81 P’14, president and CEO of Bank of America, whose bank’s often illegal foreclosures and highly questionable mortgage practices have wreaked havoc on cities across the country, Providence included. This summer, multiple former employees came forward alleging that these abuses have continued under Moynihan.
And then, of course, there’s Cohen.
An honorable mention goes to Tanya Godrej Dubash, scion of the billionaire Godrej family, which wields considerable influence in India. Dubash seems to be the ethics champion among the Corporation’s billionaire contingent.
But it’s not just about the billionaires, either.
Almost half of the Brown Corporation comes from the financial industry, from an assortment of banks, hedge funds and venture capital firms. A few years ago, the financial industry’s systemic, almost kleptomaniac greed took down the economy. And still these people are running the school.
There’s a finer point here, beyond Cohen’s alleged wrongdoing and the massively unethical financial industry, beyond the fact that the Corporation could probably save on travel by holding their meetings in a deposition room. The Corporation is controlled by people whose primary qualification is their ability to make a lot of money really, really quickly. This skill has virtually nothing to do with running a university. Our mission statement claims that we “serve the community, the nation and the world by discovering, communicating and preserving knowledge and understanding in a spirit of free inquiry, and by educating and preparing students to discharge the offices of life with usefulness and reputation.” Our mission makes no mention — none — of the rapid accumulation of wealth. It’s frankly bizarre that Brown University is run by people who have in their careers demonstrated virtually no interest in anything a university is supposed to do.
Even from a budgetary or operational perspective, being very, very rich isn’t really relevant — Brown can’t fund itself by, for example, buying up businesses, firing workers and selling the whole thing off at a profit — beyond the fact that rich people have tons of money and rich friends they can raise money from.
So whether or not one has a problem with the financial industry itself, it’s hard to make the case that any of this makes sense. The various ways in which Brown fails to support the community and the nation — its exorbitant tuition, its failure to reach out to and recruit Providence high school students, its continued reluctance to provide workers with fair wages and benefits, its emphasis on big-ticket sciences over the humanities, its massive spending on deluxe housing and athletic facilities — all mirror the fundamental flaws in the composition of the Corporation and its Wall Street values.
What’s happening is hardly a secret. The University sells its governance to the highest bidder. It’s not a coincidence that our board has a billionaire percentage over 300,000 times that of the general population. We take on billionaires because they donate millions of dollars to the University. Brown’s governance is effectively parceled out as a thank you.
The temptation to sell our souls for all that cash is understandable. But it’s also wrong. What the Corporation does is too important and affects too many people for it to be filled with financial industry Masters of the Universe. Surely most wealthy alums aren’t so nefarious that they wouldn’t donate without a trusteeship as a prize. The Corporation’s composition should reflect the University’s mission and be determined by students, faculty and staff. There are some excellent, qualified people on the Brown Corporation, but they should be the rule rather than the exception.
Daniel Moraff ’14 can be reached at daniel_moraff@brown.edu.
ADVERTISEMENT
