SAC Capital says it stands behind indicted trader
NEW YORK -- SAC Capital Advisors, the giant hedge fund that has been in the federal government’s cross hairs, came out in support of one of its portfolio managers accused of insider trading.
FBI agents arrested Michael Steinberg at his home on Manhattan’s Upper East Side early Friday morning. Federal prosecutors later announced a five-count indictment alleging that Steinberg was part of a insider-trading scheme on Wall Street.
In a statement, SAC Capital stood behind Steinberg: “Mike has conducted himself professionally and ethically during his long tenure at the firm. We believe him to be a man of integrity.”
Barry Berke, Steinberg’s attorney, said in a statement that his client “did absolutely nothing wrong.”
Steinberg, 40, later appeared in a federal courtroom in Manhattan wearing a white dress shirt underneath a navy blue sweater. He said little during the hearing, but when U.S. District Judge Richard Sullivan asked how he pleaded to the indictment, he answered: “Not guilty, your honor.”
[For the Record, 1:42 p.m. PDT March 29: An earlier version of this post stated that Michael Steinberg is 41. He is 40.]
He was to be released later in the day on $3-million bail, with his travel restricted to New York, New Jersey, Connecticut, Florida and California.
Steinberg is the latest to face charges in a federal crackdown on insider trading on Wall Street. Since August 2009, U.S. Atty. Preet Bharara’s office has charged 81 defendants, including Steinberg. Of those, 71 have been convicted, mostly through plea deals. There have been no acquittals.
George Venizelos, an FBI special agent in charge in New York, said Steinberg was at the center of an “elite criminal club, where cheating and corruption were rewarded.”
“Research was nothing more than well-timed tips from an extensive network of well-sourced analysts,” Venizelos said in a statement.
Steinberg, who was put on leave from SAC Capital in September, has worked for the Connecticut-based firm since 1997, according to a source familiar with the matter.
He had been working as a portfolio manager in an affiliated hedge fund called Sigma Capital Management, where he oversaw trading in stocks of technology, media and telecommunications companies.
The government’s case against him involves trading in the stock of two tech companies, computer-maker Dell and processor-maker NVIDIA., from 2007 until 2009. The government alleges that Steinberg received lucrative, non-public information directly and indirectly from inside sources.
Prosecutors allege he earned $1.4 million in illegal profits.
Among the participants in the scheme was an analyst at a wealth management company in South Pasadena, according to the indictment.
Central in the case is Jon Horvath, an analyst who worked with Steinberg. Horvath has pleaded guilty to securities fraud charges and has been cooperating with the government.
The government’s evidence includes wiretap intercepts, as well as records such as emails and testimony from cooperating witnesses, federal prosecutors said Friday.
In 2008, according to the indictment, Horvath wrote to Steinberg: “Pls keep the DELL stuff especially on the down low.”
Steinberg later said in his own email to Horvath: “Yes normally we would never divulge data like this, so please be discreet.”
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