"He is a hugely successful trader," Foster told the judges. "He didn't just lose that $5.5 million. He kept it off the statement."
Cohen, 55, started SAC in 1992 with about $25 million and the hedge fund firm now has about $14 billion under management.
"I feel my attorney did a good job," Patricia Cohen said after the oral argument. "I think they really understood the facts that Mr. Foster laid out."
"I am cautiously optimistic there's going to be a reversal," her lawyer said.
Jonathan Gasthalter, a spokesman for Cohen, wasn't immediately available to comment on the proceedings.
Patricia Cohen said in her lawsuit that SAC Capital was "the product of an ongoing racketeering scheme" that has engaged in insider trading, bank fraud, money laundering and other misconduct.
She also claimed she was entitled to at least half of his business, saying it was developed in part with $1 million that she earned from a real estate business.
Steven Cohen said the couple had $17 million in marital assets in the divorce, and Patricia Cohen accepted a $3.5 million settlement, $2.5 million of which was an apartment, according to the complaint.
Clients of Willkie Farr include Bloomberg LP, the parent of Bloomberg News.
The case is Cohen v. Cohen, 11-1390, U.S. Court of Appeals for the Second Circuit (Manhattan), and 09-cv-10230, U.S. District Court, Southern District of New York (Manhattan).