Friday, 24 October 2014
Last updated 1 hour ago
Dec 4 2013 | 1:52pm ET
A lawyer for SAC Capital Advisors portfolio manager Michael Steinberg launched his assault on the government's star witness in the insider-trading case, suggesting that Jon Horvath is a liar simply trying to save his own skin.
Horvath, Steinberg's former analyst, testified earlier that he began mining confidential corporate information in 2007, after Steinberg allegedly demanded that he come up with "edgy, proprietary information." But Steinberg's lawyer, Barry Berke, won an admission from Horvath that such terminology was common at SAC, even before the conversation.
Steinberg "used the words 'proprietary' and 'edgy' throughout" Horvath's time at SAC, which began in 2006, Horvath said. And Berke showed the jury a number of SAC documents that used the words, including an e-mail Horvath received on his first day at the job.
Berke also called into question Horvath's recollection of the 2007 conversation, noting that Horvath had been travelling when the confrontation allegedly took place. When Horvath said he must not have recalled precisely when the encounter occurred, Berke shot back, "or that the conversation ever took place."
Horvath was also confronted with a diary entry he wrote called "Jon's Trading Rules," which included the admonition, "Ask yourself in each trade, what do I have that is proprietary?"
Horvath said the entry was written after he came to SAC and was cribbed from a SAC memo.
Berke also hammered away at how much Steinberg knew about Horvath's activities, asking, "You didn't tell him you were going to do something illegal?"
"No, I didn't tell him explicitly," Horvath said.
The battle between Berke and Horvath has some time to run; Berke noted he has seven binders full of documents he wishes to review with Horvath, and suggested that his cross-examination would not be completed until at least Monday.
Prior to the beginning of Berke's questioning, Horvath sought to show that Steinberg knew his activities were illegal. Noting that his name had come up in the investigation into expert-networker John Kinnucan, Steinberg allegedly said, "I've been talking to some people and it turns out the further you are from the source, the more difficult it is to connect you to the source. Therefore, in this situation, because I'm so far from the source, I'm OK."
In the wake of the arrest of Galleon Group founder Raj Rajaratnam, Horvath said that Steinberg warned him, "Don't talk to anyone you don't really trust because people are running around wearing a wire." And following a raid on Diamondback Capital Management, where one of Horvath's sources, Jesse Tortora, worked, Steinberg allegedly asked, "What are you going to tell the FBI when they ask how good Jesse was on Dell?"
"I'm going to say Jesse was quite good," Horvath said.
"No, you tell them, 'Jesse was just OK' on Dell," Horvath alleged that Steinberg responded.
Horvath told the jury that Steinberg has also sought to have a database filled with references to "JT" and "Dell Checks" removed. Steinberg allegedly told him "I was told by SAC I just can't do it. I just can't have it removed."
Horvath also identified his sources at Sun Microsystems and Ingram Micro. At Sun, he said he received tips from a business-school friend, Davide Pacchini. At Ingram, the source was Christian Bednarz.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...