From the beginning, one of the concerns expressed by lawyers for hedge fund portfolio manager Michael Steinberg was that their client would have a hard time finding jurors who weren’t biased by the overload of negative news coverage of his employer, SAC Capital. But it turns out that their problem is something bigger: potential jurors don’t just dislike SAC, they hate all of Wall Street.
Steinberg, 41, was arrested by FBI agents on March 29 at his Park Avenue apartment and charged with with trading on inside information in two technology stocks, Dell (DELL) and Nvidia (NVDA). Prosecutors accused him of having participated in a ring of illegal hedge fund information-sharing, in which market-moving tips were leaked from company insiders to hedge fund traders and analysts. Steinberg is the highest-level employee of Steven Cohen’s SAC hedge fund to have been charged in the government crackdown on illegal Wall Street trading, which has so far yielded 76 convictions or guilty pleas. Steinberg has pleaded not guilty.
On the first day of Steinberg’s insider trading trial, which began yesterday, a group of 100 potential jurors was ushered into a capacious courtroom in lower Manhattan to face Judge Richard Sullivan, an acidic wisecracker tasked with whittling the group down to 12 jurors and 4 alternates. He walked them through twelve pages of questions, ranging from “Have you read any recent articles about insider trading investigations or prosecutions?” to “What do you do in your spare time?” But when he got to question 18, “Do you have any strong impressions, positive or negative, of people who work on Wall Street or in the financial industry, including at investment banks, mutual funds, or hedge funds?” it became clear that, among this representative sample of the American public, at least, Wall Street money men rank about as high as meal worms.
“I was active in the Occupy Wall Street movement,” said one young man in a white T- shirt and reddish beard.
An older gentleman put his hand up.
“You have strong feelings?” Sullivan asked.
“Yes,” the man said.
“Positive or negative?” Sullivan asked.
At least half a dozen more hands flew into the air.
“There is fraud on Wall Street and big hedge funds are the primary instigators in people having low wages,” said another during further questioning.
Things weren’t looking so good for Barry Berke, Steinberg’s broad-shouldered lead defense lawyer from Kramer, Levin, until Sullivan got to question 26: Do you have any bias, prejudice or other feelings towards the United States Department of Justice, the United States Attorney’s Office, the FBI, the U.S. Securities and Exchange Commission, or any other law enforcement or securities regulatory agency? Almost as many hands went up as before.
“I have issues with all these agencies,” someone said.