SAC Capital’s top portfolio manager Michael Steinberg was convicted on Wednesday of insider trading charges.
Steinberg was convicted of conspiracy and securities fraud after a five-week trial in Manhattan federal court.
Federal jury found Steinberg guilty
A federal jury in Manhattan found Steinberg guilty on all five counts of conspiracy and securities fraud that he faced. Prosecutors said Steinberg traded on confidential information that was passed to him by an SAC analyst, who later admitted to swapping illegal tips with friends at other firms.
The verdict was the latest victory for federal prosecutors in New York in their four-year crackdown on Wall Street insider trading that has resulted in convictions of 77 people and no trial losses.
Steinberg was arrested in March
As reported earlier, during March, SAC Capital Partner’s long-time portfolio manager, Michael Steinberg was arrested by The Federal Bureau of Investigation. The authorities charged the portfolio manager with four counts of securities fraud and conspiracy to commit securities fraud in connection with the allegation that he committed illegal trades in the shares of Dell Inc. (NASDAQ:DELL) and NVIDIA Corporation (NASDAQ:NVDA), based on information obtained from an analyst. Furthermore, the Securities and Exchange Commission filed an insider trading complaint against Steinberg in the federal court of Manhattan.
However, Steinberg pleaded not guilty and posted a $3 million bond. He was arrested based on information provided by his former analyst Jon Horvath, who admitted to wrongdoing.
E-Mail subtext as evidence
Demethress Gordon, the jury forewoman, said in an interview after the verdict that ‘the subtext’ of e-mails presented as evidence in the trial convinced her that he ‘knew, that he was aware’ he was breaking the law.
After deliberating for little over a day, a jury found Steinberg guilty of using illegal tips on technology stocks provided by his former securities analyst, Jon Horvath, to reap over $1.4 million in illicit profits.
Horvath testified, quoting Steinberg: “What I need you to do is get me edgy, proprietary, market-moving information that we can use to make money on these stocks”.
Manhattan U.S. Attorney Preet Bharara said: “Like many other traders before him who, blinded by profits, lost their sense of right and wrong, Steinberg now stands convicted of federal crimes and faces the prospect of losing his liberty.”
Michael Steinberg faces a maximum of 85 years in prison. He will be sentenced on April 25 before U.S. District Judge Richard Sullivan, who has entered six of the 10 longest sentences in insider trading cases Bharara’s office has brought since 2009.