Want to learn the ideas in Black Edge better than ever? Read the world’s #1 book summary of Black Edge by Sheelah Kolhatkar here.

Read a brief 1-Page Summary or watch video summaries curated by our expert team. Note: this book guide is not affiliated with or endorsed by the publisher or author, and we always encourage you to purchase and read the full book.

Video Summaries of Black Edge

We’ve scoured the Internet for the very best videos on Black Edge, from high-quality videos summaries to interviews or commentary by Sheelah Kolhatkar.

1-Page Summary of Black Edge

Overview

Black Edge is a nonfiction legal thriller about the U.S. government’s attempt to take down billionaire hedge fund manager Steven A. (Steve) Cohen for insider trading, as well as a look at how much of Wall Street evades the law by using loopholes in existing laws and regulations to avoid prosecution for their crimes.

For decades, hedge funds in the United States followed a fairly careful investment strategy. They would estimate which public companies would do well and invest in them, as well as short-sell or sell shares of companies that they believed would soon lose value. However, by the mid-2000s, SAC Capital Advisors had led all other hedge funds to pursue information about public companies to which few if any other traders had access. This allowed them to gain an advantage over others who were not privy to this type of information. The problem was that obtaining this type of information was often illegal; therefore it was called insider trading.

In 2006, US government regulators became aware that insider trading was common on Wall Street through an unrelated investigation. They launched a probe into the industry and quickly realized that much of the shady trading originated from SAC Capital Advisors, which is a hedge fund run by Steve Cohen.

Over the next 10 years, federal agencies such as the FBI and SEC investigated illegal activity by traders. They wiretapped phone lines and subpoenaed documents from those people who appeared to be involved in illegal activities. The government was able to convict or get guilty pleas from many of them. It also imposed $2 billion in fines on SAC Capital for permitting this illegal activity within their firm but never brought a criminal insider trading case against Cohen himself because he walked away virtually unscathed after the decade-long investigation.

The government has been unable to prosecute people who have profited from insider trading. In 2014, a court ruling made it harder for the government to bring down these individuals.

The US government’s pursuit of Cohen is an example of how the richest people in Wall Street often manipulate the system to their benefit.

Key Point 1: Hedge funds became a powerful force on Wall Street in the mid-2000s.

Hedge funds have been around for a long time, but they used to be more exclusive. Nowadays, hedge funds are known for making outrageous profits and taking advantage of people’s money. These organizations control over $3.5 trillion in assets globally and are one of the main forces driving inequality throughout the world.

The reputation of hedge funds has been damaged by the government’s investigation into insider trading and public anger towards Wall Street in the wake of the 2007-2008 financial crisis. However, as of 2018, hedge funds are experiencing a renaissance. In 2016, investors withdrew $110 billion from the industry because it wasn’t generating high enough returns. Then in 2017, returns reached 11.45 percent and investors brought $44.4 billion back into the industry; last year was their best since 2010 (with January 2018 being their best month ever). It may be due to equity markets falling that they’re investing in hedge funds as a way to diversify their portfolios

Key Point 2: Steve Cohen is a brilliant trader who voraciously consumes information about the market and takes huge risks without fear.

Unlike many financiers, Steve Cohen wasn’t born into wealth. He grew up in a middle-class family and didn’t have many friends. At an early age he studied the financial markets, loved money, and wanted to prove himself to the world. By the time he got his first job at Gruntal & Co., he had a keen understanding of market trends and was able to take on risk without fear. In 1992, with $20 million of his own money, Cohen started SAC Capital Advisors. His trading skills helped him reach $17 billion in assets by 2007 through aggressive behavior that some people say is illegal.