More trouble for Cohen’s SAC Capital as Steinberg indicted in NY

By Nate Raymond and Matthew Goldstein
Fri Mar 29, 2013 11:13am EDT
(Reuters) - U.S. prosecutors on Friday charged Michael Steinberg, a veteran portfolio manager with Steven A. Cohen's $15 billion hedge fund, with engaging in insider trading in two technology stocks, the most senior SAC Capital Advisors employee to be charged in the government's long-running probe.

The five-count indictment was announced a few hours after Federal Bureau of Investigation agents arrived at Steinberg's home in New York City at around 6 a.m. ET and arrested him.

An exterior view of the headquarters of SAC Capital Advisors, L.P. in Stamford, Connecticut, in this picture taken December 13, 2010. Credit: Reuters/Mike Segar

An exterior view of the headquarters of SAC Capital Advisors, L.P. in Stamford, Connecticut, in this picture taken December 13, 2010.
Credit: Reuters/Mike Segar

Federal prosecutors are charging Steinberg, 40, with using inside information to make trades in shares of Dell Inc and chipmaker Nvidia Corp that generated about $1.4 million in illegal profits for Cohen's hedge fund.

Barry Berke, Steinberg's lawyer, said in a statement issued shortly after his arrest that his client had done "absolutely nothing wrong" and his "trading decisions were based on detailed analysis."

SAC Capital spokesman Jonathan Gasthalter said: "Mike has conducted himself professionally and ethically during his long tenure at the firm. We believe him to be a man of integrity."

Steinberg, who was suspended last autumn from his post at SAC Capital's Sigma Capital division after his name surfaced during another insider trading trial, is scheduled to be arraigned later on Friday.

In a related civil complaint against Steinberg, the U.S. Securities and Exchange Commission said the information allowed Steinberg to generate $6.4 million in profits and avoided losses for Cohen's hedge fund.

Steinberg is one of nine current or former employees of SAC Capital who have been charged or implicated with insider trading while working at Cohen's 2-decade-old hedge fund.

His arrest had been widely expected after Jon Horvath, a former SAC analyst who worked closely with him, pleaded guilty last year to using illegally obtained information to trade in Dell. Horvath has been cooperating with the government and had implicated Steinberg.

Steinberg has been moving among several hotels in New York City in recent weeks, according to Reuters sources, as he wanted to avoid being arrested at his Upper East Side home where he lives with his wife and two children.

The arrest comes two weeks after SAC agreed to pay a record $616 million to the SEC to settle civil charges of insider trading. SAC neither admitted nor denied wrongdoing at that time.

But the government made clear that that settlement did not preclude further charges.

As part of that settlement, SAC Capital agreed to pay $14 million to settle charges of improper trading in Dell.

(Additional reporting by Svea Herbst-Bayliss and Sruthi Ramakrishnan; Editing by Tiffany Wu and Maureen Bavdek)


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