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Mr. No Comment
When Steven Cohen and the hedge fund elite battle the press, Jonathan Gasthalter — PR man extraordinaire — throws the punches.
In March 2007, not long before the financial crisis sent international markets and economies into a tailspin, Charles Gasparino was summoned by his CNBC producers. Listen, one said, we want you to go down to the federal courthouse. There's a crazy case of a trader who said he was sexually abused by his boss. We're going to bring a camera down there. We're going to get a court sketch.
The company in the network's crosshairs was Steven Cohen's $12 billion hedge fund, SAC Capital Advisors. The boss in question, Ping Jiang, was an SAC star who earned an estimated $100 million a year.
Gasparino headed to the courthouse, where he encountered Cohen's famously aggressive attorney, Martin Klotz.
"He gets up, he sees me, his fucking head explodes," Gasparino recalls.
Klotz asked the judge to seal the case, and he agreed to do just that on account of the likelihood that the "salacious and yet-unproven allegations" might be publicly disclosed.
God, thought Gasparino, what could be in this lawsuit?
The hard-nosed reporter approached lawyers from the respective parties and was stonewalled. But soon enough he got ahold of the lawsuit — and it was like none he'd ever seen.
Andrew Tong, a former junior trader at SAC Capital, was alleging that Jiang, under the guise of teaching him a new trading method, had demanded he take female hormones to be less aggressive. ("Don't worry," Jiang allegedly told him, "you'll get prettier with makeup.") Eventually, claimed Tong, he suffered emotional and physical distress and could no longer perform sexually with his wife.
It was time for Gasparino to talk to SAC. He approached the firm's external public relations counsel, Jonathan Gasthalter of Sard Verbinnen & Co.
Gasthalter was not pleased.
"He lost his fucking mind. I'll never forget. What the fuck?" says Gasparino.
Crucially, the CNBC reporter had a draft of the lawsuit, but not the final complaint; the latter, as protected speech, would have entitled CNBC to publish without fear of legal action. But he ran the details by the flack. "If this isn't what's in the final complaint, let me know," he told Gasthalter.
On October 10, 2007, CNBC published Gasparino's story. It began: "Sexual harassment cases are nothing new on Wall Street, but CNBC has uncovered new details of one of the most salacious cases to hit a big trading house in a long time."
Years later, Gasparino is still impressed that Gasthalter didn't minimize the contents of the draft complaint, dispute its accuracy, or simply lie. "Which he could have, and I probably would have backed off," Gasparino says. "He just understood that I had something. He didn't stop me from reporting it." (The case was eventually dropped.)
Eleven years later, after nearly two decades in public relations, Gasthalter continues to shape the way reporters write about his clients — or, just as often, don't — with great efficacy. By virtue of his position as the iron-fisted gatekeeper, he has a singular hold over the industry, to a degree unprecedented in the annals of financial public relations.
As a veteran reporter tells Institutional Investor, "He is determined to control the message."
And he's done exactly that: first at Sard Verbinnen, the powerhouse firm whose hedge fund practice he built more or less from scratch. Since 2016, Gasthalter has also done it under his own name, propelling Gasthalter & Co. to the top of the Absolute Return hedge fund PR ranking for the second consecutive year. And he's done it while representing clients that can be charitably characterized as difficult — Cohen, of course, but also Renaissance Technologies, whose former co-CEO, Robert Mercer, bankrolled former presidential strategist Stephen Bannon.
Profiling such PR prominences as Gasthalter is not easy. They of course will instinctively resist cooperating. The job of PR is to be effective, but not overtly so. Likewise: Most reporters, who are key to such a story, will not want to be party to it for fear of repercussions in the form of peers' scorn or diminished access to sources. So emails for comment will be ignored or politely waved away. If they do talk, it will be on background. Maybe they'll offer to send an antiseptic statement, and then "forget" to write it.
Who is this guy? And why does he inspire such a mix of respect, caution, and fear?
Gasthalter, raised in the New York suburbs by a lawyer and a speech therapist, grew up reading the sports and metro sections of The New York Times. He had an obsessive fascination with the news. Preferring work over study, he wrote for the local paper and scooped ice cream. Exposure to the financial markets began early, when he received dividend-paying shares of the Boston Celtics as a bar mitzvah gift.
At age 16, Gasthalter was a passenger in a car that was T-boned. Airlifted to Westchester Medical Center, he was unconscious for three days. He broke his pelvic bone, bones in his back, and three ribs; punctured a lung; and, to boot, sustained a head contusion.
Gasthalter went off to Union College in Schenectady, New York, where he majored in political science, was an editor at the campus newspaper, and did play-by-play for the school's hockey games. At 6-foot-3, he could be seen on the sidelines, towering over the coach. Christopher Leone, a school superintendent in Connecticut, was a fellow editor of Concordiensis. He recalls Gasthalter as focused and dedicated. "He had passion for doing things thoroughly," he says.
John Vero, a lawyer in Albany, New York, met Gasthalter at Phi Delta Theta and remains a close friend. Vero says his fraternity brother's tenacity is ever-present, particularly when they have personal disagreements. "He's a formidable foe," he says. "But I can go toe-to-toe with Jon. That's what I love about our relationship."
Not long after graduation, Gasthalter was hired as a press aide to Dennis Vacco, New York's attorney general, who would be notable for prosecuting internet service providers on charges of distributing child pornography. Upon being elected in 1995, Vacco needed to have an image throughout the state, rather than just the Western District.
Gasthalter, fresh out of college, came in for an interview. "He had no experience whatsoever," Vacco recalls, "but what struck me was he had a cockiness to him, a self-assuredness to him." He exhibited a willingness to find unorthodox means to publicize, say, an anti-drug campaign, and to make sure it reached the downstaters, including Suffolk and Nassau counties, and Westchester. So Gasthalter set up and ran events, and took photographs of the boss that were sent out to the local weeklies.
Vacco particularly credits Gasthalter with press coverage related to a dispute between New York and New Jersey over the sovereignty of Ellis Island. The case had gone all the way to the U.S. Supreme Court. As a means to get favorable coverage for New York's position, it was Gasthalter's idea to, in the style of David Letterman, write a slightly cutting, slightly biting top-ten list of why Ellis Island belonged to New York state. Vacco recalls that the list resulted in interviews across print publications, radio, and television.
"Even though, ultimately, New Jersey prevailed in the Supreme Court, I think that because of Gasthalter's top-ten list, we really won in the court of public opinion," he says.
In 1999, after Vacco lost reelection, Gasthalter applied to Sard Verbinnen. This is a firm that, as Bloomberg Businessweek would put it, has the "ability to influence a major news event without leaving fingerprints. It's a firm that seeks to be in every financial reporter's inbox, and sourced in none of their stories."
At the turn of the millennium, Sard Verbinnen, which was founded in 1992 by expatriates of Ogilvy Adams & Rinehart, had approximately 60 clients and was growing rapidly. The firm was concerned primarily with public companies, and by the latter part of the decade was representing Banc One Corp., IBM, and Aetna. Clients were charged upward of $50,000 a month.
George Sard, the firm's co-founder, was impressed with the upstart's hands-on experience dealing with press and high-profile situations. "He was smart. He was hungry. He was not mealy-mouthed. And he expressed an interest in learning the business," Sard says.
The firm had a new client called Pequot Capital Management, then one of the largest hedge funds in the land. Gasthalter led the account, and eventually guided it through a Securities and Exchange Commission investigation into insider trading. "At all times, Pequot's securities trading has been entirely proper and not based on insider information," he told Walt Bogdanich and Gretchen Morgenson, who quoted him in a pair of New York Times stories in 2006.
Morgenson, now at The Wall Street Journal, tells Institutional Investor Gasthalter "was very direct and straightforward, and that can be unusual in this business."
Indeed, he was direct — famously so, eventually — and adept at giving reporters very little on the record:
Reuters: COHEN IS SAID TO REMAIN SILENT IN INSIDER-TRADING PROBE ("Gasthalter declined to comment on whether Cohen had invoked his Fifth Amendment right.").
Bloomberg: THE 'HEAD TRADER' IN THE BIGGEST INSIDER TRADING CASE HAS BEEN IDENTIFIED ("Jonathan Gasthalter, a spokesman for Stamford, Connecticut-based SAC . . . declined to comment.").
Reuters: SAC'S COHEN BUYS SMALL STAKE IN NEW YORK METS ("Cohen's spokesman, Jonathan Gasthalter, declined to comment.").
The New York Post's Page Six: BILLIONAIRE DITCHES PET HOG AFTER HE GETS TOO PORKY ("His spokesman, Jonathan Gasthalter, declined to comment on the fate of the bulky boar.").
His skill at saying only as much as necessary on the record became legendary. While not commenting is a part of any PR arsenal, an editor at the Financial Times went so far as to call "no comment" a Gasthalter "catchphrase." The young PR man embraced it, says a source, noting that he would call himself "Mr. No Comment."
In the investment management space, PR is expected — even demanded. But that wasn't always the case. In fact, many of Gasthalter's early clients had never given their public profiles a second thought.
In the hedge fund space particularly, the relationship to PR has been historically weird. For most of their existence, the funds had little use for it. It's a familiar history: Structured as limited partnerships, hedge funds weren't required to register with the SEC as investment advisers, and that, in turn, precluded advertisements, media interviews, and even public-facing websites. The raucous SALT Conference, founded in 2009 by Anthony Scaramucci (now more famous for telling The New Yorker that erstwhile Trump adviser Stephen Bannon could "suck [his] own cock" than for his work as a financier), would've been unimaginable, and perhaps even illegal.
So: What did public relations even mean for funds that were, in fact, regulatorily prohibited from relating to the public? Thomas Walek, a veteran of the space, began working with hedge funds when he founded Walek & Associates in 1998. At the time, they couldn't talk about performance, funds, and fees, or anything that could be perceived as marketing-oriented.
"It was a lot of on-the-record 'no comment' and then talking on background," he says.
Eventually, after the turn of the century, the rules changed — but hedge funds generally still avoided talking about funds, performance, and fees. They would, however, talk about market insights and observations. This was in considerable demand. Observing the shift in 2005, Daniel Gross wrote, "A large infrastructure of marketing, lobbying, public relations, and consulting professionals has sprung up to service the industry and raise funds."
It was more or less at this juncture that Gasthalter cut a swath through major media outlets. He had learned to love investment management — the timeliness! the daily activity! — and was attending conferences so he could be more fluent in the business's technical side. And he was excelling, bringing in clients at a decent clip.
Press mentions tell the tale of his rise through the ranks: There he is in July 2002 in The New York Times, declining to comment on the Nelson Doubleday lawsuit. A year later he's in Barron's, repping Paramount Investors. And the next year he's in a press release touting a massive judgment in a lawsuit involving Gary Michelson, a spinal surgeon and investor whom a Memphis jury awarded $400 million in punitive damages. (Reached for comment, Michelson says he doesn't remember Gasthalter.)
From Gasthalter's perspective, an early notable success was an Institutional Investor profile of Pequot Capital Management by Stephen Taub. Taub, who has written about hedge funds for 30 years, remembers driving up to Connecticut in the fall of 2005 to meet with Pequot's CEO, Arthur Samberg, and sitting with Gasthalter until he arrived.
Taub would continue to work with Gasthalter on his annual Rich List of top-earning hedge fund managers. "Whenever you call a hedge fund that you've never talked to before for comment, and they don't call you back, nine times out of ten when the PR person [does] call back, it's Gasthalter," he says.
Gasthalter believed there was an opportunity for investment managers, including hedge funds, to tell their stories, address issues with limited partners, and raise performance issues. So he began building up a practice within Sard Verbinnen, which at the time had only a few hedge fund clients.
What really put Gasthalter on the map was a client with whom to this day he has remained close: Steven Cohen.
By all accounts, Gasthalter excelled at crisis work, particularly when clients faced SEC or criminal investigation. He was known internally for his calmness under pressure, his tirelessness — colleagues and clients alike could call at all hours of the night and he'd pick up the phone — and his gift for keeping clients from making fools of themselves in front of reporters.
"His first reaction to most things in a crisis situation was to advise clients not to talk when the instinct usually is to talk," a senior colleague says.
This instinct, which ought to be the first rule of crisis management, would come in handy during Gasthalter's dealings with SAC Capital and Cohen.
In 2006, SAC Capital was referred to Sard Verbinnen co-founder George Sard. For a year, including through the Ping Jiang lawsuit, Sard and Gasthalter worked together on the account. It was becoming clear, however, that Gasthalter was cultivating a close relationship with Cohen and his wife, to the point where Sard stepped back. Gasthalter would still occasionally bounce ideas off his boss, but the account was his. And it became his calling card.
Arguably, the largest crisis Cohen faced occurred in November 2012, when federal prosecutors charged Mathew Martoma, a former portfolio manager at CR Intrinsic Investors (a unit of SAC Capital), with, in the words of the indictment, "mak[ing] over $276 million in illegal profits or avoid[ing] losses in July 2008 by trading ahead of a negative public announcement involving the clinical trial results for an Alzheimer's drug being jointly developed by Elan Corporation, plc ('Elan') and Wyeth." (The indictment doesn't identify Cohen, but refers to him as "Portfolio Manager A.")
In other words, insider trading.
"Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government's inquiry," Gasthalter said in a statement published by The New York Times.
SAC Capital had already been a target of investigators. In November 2010, the SEC raided the offices of investment companies run by former SAC traders. (Bloomberg News: "Jonathan Gasthalter, a spokesman for the firm . . . declined to comment.") Then SAC Capital received subpoenas, which, the firm told investors, don't "shed much light on whom or what the government may be investigating." A few months later, in February 2011, two former SAC Capital managers were charged with insider trading while under Cohen's employ. (Reuters: "SAC Capital spokesman Jonathan Gasthalter said what the former junior portfolio managers did 'required active circumvention of our compliance policies and are egregious violations of our ethical standards.'")
Nine former SAC employees were charged with conspiracy and securities fraud, and Martoma was sentenced to nine years in prison. In 2014, SAC Capital agreed to plea guilty to criminal fraud charges and pay $1.8 billion in civil and criminal fines, and Cohen was eventually barred for two years from managing other people's money.
Gasparino, now a Fox Business Network senior correspondent, was among the reporters who kept crossing paths with Gasthalter. He says he likes and respects him. Reflecting on his years of using Gasthalter as a source, he says, "I'm not saying he's never given me a bad steer. I don't think he's done it purposely, which is what I appreciate about him. There were times where I had stories about SAC that he would deny that turned out to be true. There were, like, two or three instances. I'm convinced it's not because he was lying to me. I'm convinced that it was more them telling him what to say or denying it to him."
In 2013, Gasparino published Circle of Friends: The Massive Federal Crackdown on Insider Trading — and Why the Markets Always Work Against the Little Guy ("good reviews, but it sold like shit"), and ahead of publication he sent Gasthalter the chapters on Cohen. Gasthalter sat down with Gasparino at Fox's offices and went through the chapters.
"Here's the thing: You want to exhaust me, I can exhaust you back," reflects Gasparino. "I have no problem going through something line by line with you and fighting you on every word." Gasthalter, Gasparino notes, successfully pushed back on some of what he'd written.
"[Gasthalter] knows what his currency is," Gasparino continues. "He can be the biggest asshole in the world. I mean, this is what he knows. I don't have a problem dealing with him. I actually like dealing with him. I don't care if he's an asshole. He knows he's an asshole. He knows he can be a real pain in the ass, but he doesn't lie. . . . He's not out there to just fuck you. He has to serve a client, and in his case the client was under tremendous scrutiny. He has to be aggressive, and we've had knock-down drag-outs, but he doesn't do the lying bit, which I think is commendable."
Another thing Gasthalter seems not to do, says a reporter who has had interactions with him, is try to curry favor with journalists by bringing them exclusives.
"It's pretty easy to summarize him," the reporter says. "He comes from the old-school hedge fund PR game of being reactive and doing crisis communications. Gasthalter is not going to do anything proactive; he's not going to try and be your buddy and drop, you know, favors. But he is very good at fighting for his clients in tough situations, like SAC and insider trading, where you have to bring specific information that you've gathered from other sources, and basically force him to react. . . . He's a pit bull. He's not like, 'I'm going to make friends with you.' He's the intimidating guy that you have to put your facts past." (On at least one occasion, that intimidation may have veered into something more aggressive. In her book Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street, The New Yorker's Sheelah Kolhatkar wrote that "a press representative working for Cohen threatened to have me followed.")
Gasthalter's client list just kept expanding. At its peak, in 2015, it had 39 hedge fund clients with at least $1 billion in assets under management, according to Absolute Return. Among them were Renaissance Technologies, Och-Ziff Capital Management Group, and Eton Park Capital Management.
All massive funds, soaking in money. Gasthalter, however, remained indifferent to the trappings of his clients' success — the wealth, the power, and so on.
Colleagues noticed. "None of that really means a lot to him," says one. "He can sit in the same room with the hedge fund masters of the universe and will still order pizza and a coke, and not be impressed by any of the extravagances of their lives."
Gasthalter was, frankly, an odd fit at Sard Verbinnen.
The view from the inside — which, granted, must be greeted with a dose of skepticism — is that his pugnacity was, within the confines of Sard Verbinnen, unusual. But hard-charging personality aside, a source says, Gasthalter was "a classic lone wolf." And that was a challenge for a firm that has historically been fairly team-oriented.
But philosophically, too, Gasthalter may have been out of step. He was, they say, focused on current compensation, whereas the firm at large tended to pursue a strategy of growth for investment. There was always a tension to get him to see the benefit of investment that might not pay off for a while, rather than in the here and now. A source points to Sard Verbinnen's investment in in-house digital, video, and research, measures Gasthalter opposed because "he didn't see the immediate payback."
Furthermore, Gasthalter had started to generate business among activist hedge funds — and these activists were attacking Sard Verbinnen's own corporate clients. This caused a great deal of tension — tension exacerbated by the fact that, in one telling, George Sard himself has worked with activists, including Nelson Peltz in his respective proxy battles with Procter & Gamble Co. and DuPont Co. Major law firms and investment banks often referred their corporate clients to Sard Verbinnen, and they began to get skittish because they believed, not without cause, that it was becoming known as an activist shop. On occasion, Gasthalter was approached by a particular activist to represent it, and Sard Verbinnen told him no. But the protege was committed to the business.
In hindsight, Gasthalter's exit from Sard Verbinnen seems inevitable. Clients would go so far as to ask Gasthalter during meetings when he was going to leave and start his own firm. "It was always awkward," says a former colleague. (In the final months of his tenure, the firm's founders offered to back Gasthalter if he wanted to do a spinout. He declined.)
The final straw was over noncompete agreements.
In May 2016, Sard Verbinnen announced an agreement to sell a 40 percent stake to the private equity firm Golden Gate Capital for $60 million. In exchange, Golden Gate would enable Sard to expand its office and build out its video production, political communications, and research.
In the more than two decades since its founding, Sard had never asked employees to sign noncompete agreements. Sard and Verbinnen believed there was no reason to force people to stay. But under the terms of the Golden Gate deal, this would change. The private equity firm naturally wanted to ensure that its investment wouldn't walk out the door after the contract was signed.
For Gasthalter and the 5 percent of Sard Verbinnen's total revenue his practice represented, the prospect of signing a noncompete meant he would not be able to found his own firm any time soon. And so he and two other partners resigned. A day later, reported PRWeek, "Gasthalter & Co. was registered with the New York Department of State as a foreign limited partnership based in Scarsdale."
Sard and Verbinnen were not upset by the exodus itself, but the manner in which it occurred. Gasthalter left with more than 25 clients. (Indeed, it is believed only a single client from Gasthalter's practice stayed with Sard.)
This was viewed as "unprofessional," and could have been done, perhaps, "more graciously."
In addition to the clients, Gasthalter took with him Nathaniel Garnick, Amanda Klein, and Kevin FitzGerald. In the nearly two years since he founded Gasthalter & Co., the firm has stayed small even as firms representing billions of dollars in assets continue to roll in.
He liked running a lean shop at Sard Verbinnen, and he likes running one now.
As for what the future holds for his client base of hedge fund, private equity, venture capital, real estate, and financial services firms: History suggests he will largely retain the existing roster. Gasthalter, it seems, is nothing if not loyal. "I used to say that at one time I had a database of the friends of Dennis Vacco that was 20,000 people strong," says his old boss. "But in defeat, you find out who your real friends are. And in defeat, Jonathan was one of them."
Cohen, two years out from being banned by the SEC, has returned, and his new hedge fund, Point72 Asset Management, is raising a lot of money. But it is also already embroiled in a discrimination lawsuit that faintly echoes that long-ago case in 2007, when Gasparino barreled into court. Lauren Bonner, the firm's head of talent analytics, alleges that Point72's hiring committee is all male and that some members have said they won't hire women because their "wives won't let them." In late February a lawyer for Cohen asked to seal the lawsuit. But this time the judge denied the request, saying it was too broad. "A spokesman for Point72," reported Reuters, "said the firm declined to comment." (Incidentally, it's a testament to the cutthroat nature of the business that, just before this story went to press, a Gasthalter competitor passed along rumors he and Point72 had parted ways.)
But Gasthalter will almost certainly remain by Cohen's side. He will also continue to attract like-minded individuals. A former colleague sees Gasthalter and his clients as cut from the same cloth, and puts it this way: "Jonathan's clients are founders. They're small operations. While they may make a lot of money, they're probably the stingiest group of any client base that I would work with. They have to see real value to continue having a working relationship with you. And that's what Jonathan always provided."
Institutional Investor reviewed the particulars of this story with Gasthalter and asked for comment. He declined.