Wednesday, 28 September 2016
Last updated 11 hours ago
Nov 21 2013 | 11:40am ET
SAC Capital Management trader Michael Steinberg was the beneficiary of a "secret pipeline" of confidential corporate information, helping him earn millions for the scandal-tarred hedge fund, prosecutors alleged yesterday.
Steinberg's insider-trading trial got underway in earnest with opening statements in Manhattan federal court. Prosecutor Antonia Apps told the newly-empanelled jury that Steinberg worked to get "secret, confidential information" through a network of "corrupt" corporate insiders and hedge fund analysts.
"Why? He did it to make big money for himself and for the hedge fund where he worked. That, ladies and gentlemen of the jury, is what we call insider-trading," Apps said during her 45-minute opening.
Steinberg's lawyer, Barry Berke, denied that his client knew he was trading on confidential information, using a prosecution diagram of the network to show that "Mr. Steinberg is over there, four people removed." Berke said that Steinberg's former analyst, Jon Horvath, who is cooperating with prosecutors, withheld the source of his information from his boss in order to save his own skin.
"He needed to trade his freedom for that of another," Berke said.
"I know there are strong views today about Wall Street," Berke continued. "I know I don't have to tell you this case is obviously not a referendum on Wall Street."
Steinberg, who is on leave from SAC, is the highest-ranking employee of the hedge fund to be criminally charged, and a personal friend of SAC founder Steven Cohen. He is accused of earning the firm $3.1 million trading shares of Dell Inc. and Nvidia Corp., and faces up to 85 years in prison if convicted.
Before Apps and Berke spoke, U.S. District Judge Richard Sullivan seated a 12-member jury and four alternates. On the main panel, nine of the members are women and three are men. Two are accountants, another is a massage therapist and a fourth is an unemployed home health aide. Of those eventually dismissed were three people who participated in the Occupy Wall Street protests two years ago.
Steinberg's trial is expected to last up to four weeks. In addition to Horvath, SAC CFO Daniel Berkowitz will testify, and prosecutors may even seek to call Cohen himself. SAC's guilty plea on insider-trading charges earlier this month is not expected to come up, as it did not cover Steinberg's alleged crimes.