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Steven Cohen wants to buy the Dodgers, but people who worked for him keep getting arrested

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One of the potential bidders for the Dodgers, due to be sold out of bankruptcy by April 30, is Steven Cohen, a secretive and monumentally successfully hedge fund billionaire. I've already written about how he made his money. I've also speculated on why he might want the Dodgers. What I haven't dealt with is that possibility that he could wind up in jail.

That's probably overstating the case. However, Cohen's firm, SAC Capital Advisors, has seen a number of former employees get in hot water with the Securities and Exchange Commission over insider trading. And the heat just got turned up a few notches. As part of an ongoing investigation into insider trading at hedge funds, the FBI has arrested three SAC Capital alumni (and they aren't the first to face prosecution). This is from CBNC's John Carney:

The FBI arrested John Horvath, who worked at Sigma Capital, a unit of SAC Capital Advisors. Also arrested by the FBI was Anthony Chiasson, the co-founder of the Level Global hedge fund and a former SAC Capital employee.

Todd Newman, a former trader at Boston's Diamondback Capital Management, was also arrested. Diamondback was founded by an alumni of SAC Capital.

The fourth man arrested, Danny Kuo of Whittier Trust, did not appear to be connected to SAC Capital.

Danny Kuo notwithstanding, Carney raises the specter that the SEC is doing some island-hopping before invading the mainland. He links to this 2010 piece by Fortune's Duff McDonald, who comes right out says that the feds are on Cohen's tail. Why? Like Bernie Madoff, his returns to investors are too good to be true: a trader. According to one knowledgeable investor, Cohen has called what SAC does "information arbitrage." He and his staff are simply whipping stocks around on a day-to-day basis, trying to get an information edge over the guy on the other side of the trade. If that sounds fundamentally useless, that's because it is. There's been a lot of talk these days about whether there is any redeeming value to Wall Street whatsoever. Even among those who think there is, the trader is widely considered mere grease for the wheels of finance, an essential if undesirable part of the machine.

Still, it's not difficult to admire great calls. When we see someone risk it all and win on the big trade—think John Paulson and U.S. housing—we can all sit back and envy. But when we see someone make the right call on bigger and bigger trades for nearly 20 years running—and deliver 30% returns even after charging an absurd 3% of assets and 35% of profits as Cohen does—it's not envy that is the instinctive response; it's disbelief. No one, the thinking goes, can be that good—and that lucky—for so long. Ergo, he must be cheating. Specifically, engaging in insider trading. And that's why they've been after him for all this time.

McDonald offered these thoughts right after the FBI had raided the offices of several funds that had ties to SAC. The implication is that SAC has exported its expertise to these spinoff firms, and if the outposts are getting busted, then the home office might be where the apprentices learn to cheat — from the master.

But he goes on to speculate on Cohen's future. And it's here that we can find clues to why the hedge-fund king might want to buy the Dodgers:

Here's my bet on how this is going to play out. In the next year or two, Cohen is going to retire. In the process, he will likely wind down SAC—a huge proportion of which is his own money in any event—and will amuse himself with his gigantic art collection, doing things like selling a Manet for $33.2 million, as he did this past June. He will tell people he has nothing left to prove, and that the constant hounding by the authorities took all the joy out of the thing.

Cohen's Dodgers bid put his right on track for McDonald's timeline. If the SEC truly is closing in, then he's chosen the right moment. The question is, just how much money will he bring to the table, if he's serious about become a MLB owner? His personal fortune is estimated at $8 billion. The price of the team has been trending up: speculated at around $1 billion when embattled owners Frank McCourt put the team into Chapter 11, it's not risen to something like $1.6 billion.

If he does "wind down" SAC, he could add billions more to his bank vault. At which point we will have an incredibly rich man with a strong incentive to get out of the evading-the-FBI game going into a bidding war against less abundantly capitalized opponents. Tom Barrack is rich, but not as rich as Cohen, and besides, he wouldn't be buying the team himself, but using the resources of Colony Capital, his private-equity firm, to purchase what's increasingly not looking like a distressed asset.

Developer Rick Caruso and former Dodgers manager Joe Torre have the best argument for ownership on paper, but Caruso will probably have to stitch the financing together from various sources and claim that he knows best how to transform Chavez Ravine into something far more than a stadium and parking lot.

The rest of the bidders may not be able to keep up with the rising price. And there's no reason to assume that McCourt, who has been humiliated in this deal by Major League Baseball and Commissioner Bud Selig — but who has final say on the ultimate buyer — won't sell to the guy with the most moolah.

The SEC may have already served notice to Cohen. If that clock is ticking, then an April 30 escape from one of the most successful — and controversial — Wall Street careers ever my be just what he needs.

Follow Matthew DeBord and the DeBord Report on Twitter.