Monday, 28 July 2014
Last updated 2 days ago
Mar 29 2013 | 11:56am ET
SAC Capital Advisors portfolio manager Michael Steinberg was arrested this morning on insider-trading charges.
Steinberg, 40, is the most senior current or former SAC employee to be charged in the recent crackdown on illicit trading. His arrest had been expected for some time; he was suspended from SAC's Sigma Capital Management unit last year, after he was indentified as an unindicted co-conspirator in the case against former SAC analyst Jon Horvath and two others.
Steinberg was charged today with conspiracy and four counts of securities fraud. He was arrested at his Manhattan apartment at about 6 a.m.—despite his recent practice of spending nights at a New York hotel, to avoid being handcuffed in front of his children—and is expected to appear in federal court later today.
He was also sued by the Securities and Exchange Commission.
"Michael Steinberg did absolutely nothing wrong," his lawyer, Barry Berke, said. "His trading decisions were based on detailed analysis."
Steinberg, the seventh current or former SAC employee criminally charged in the last three-and-a-half years, has been at the firm since 1997 and has worked closely with firm founder Steven Cohen, against whom authorities have tried for months to build a case. "Mike has conducted himself professionally and ethically during his long tenure at the firm," SAC said today. "We believe him to be a man of integrity."
"Mr. Steinberg was at the center of an elite criminal club, where cheating and corruption were rewarded," the Federal Bureau of Investigation's George Venizelos said. "Research was nothing more than well-timed tips from an extensive network of well-sourced analysts."
Steinberg is accused of trading Dell Inc. and Nvidia Corp. shares based on confidential information acquired by Horvath, his former analyst, from analysts at other funds, earning SAC $3.1 million in illicit profits and losses avoided. Prosecutors have cited e-mails that show Horvath asking Steinberg to remain mum about some of the information he offered.
Horvath has pleaded guilty and is cooperating with prosecutors, and SAC earlier this month agreed to pay $14 million to settle allegations stemming from trades made by Steinberg and another portfolio manager based on Horvath's tips. A larger, $602 million, settlement was also struck, relating to a different insider-trading case.
If convicted, Steinberg faces up to 85 years in prison.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…