SAC Capital Advisors LP, the hedge fund run by Steven A. Cohen, put portfolio manager Michael Steinberg on leave after he emerged as an unindicted co- conspirator in a $62 million insider-trading scheme, according to two people familiar with the matter.
Steinberg, 40, was put on leave last week, said the people, who asked not be be named because the information is private. He has worked at SAC Capital, which oversees $14 billion, since 1997.
Steinberg, who worked at SAC Capital’s Sigma Capital Management unit, is the fifth person to be tied to the U.S. government’s insider-trading investigation while employed at the firm. He has been linked in court documents to the securities- fraud case of Jon Horvath, a former SAC Capital technology analyst that he supervised.
Horvath told a federal judge in New York during his Sept. 28 plea that he was part of a group of analysts who passed nonpublic information to each other. Horvath said he passed some material, nonpublic information about Dell Inc. (DELL:US) in August 2008 and Nvidia Corp. (NVDA:US) in May 2009, to his portfolio manager, who then traded on the information. Steinberg was Horvath’s manager, two people with knowledge of the matter said last week.
“In each instance I provided the information to the portfolio manager I worked for and we executed trades in the stocks based on that information,” he said.
Horvath is cooperating with the U.S. probe and may testify against his former co-defendants. His defense lawyer, Steve Peikin, didn’t return a call seeking comment.
SAC Capital, based in Stamford, Connecticut, and Cohen haven’t been charged with any wrongdoing. Jonathan Gasthalter, an SAC Capital spokesman, and Barry Berke, Steinberg’s lawyer, declined to comment.
SAC Capital said in a statement last week that it gave Horvath “the benefit of the presumption of innocence” and that it was “disappointed and angered” to learn that he admittedly violated the law and SAC Capital’s policies forbidding insider trading.
In addition to Horvath, two other former SAC fund managers, Noah Freeman and Donald Longueuil, pleaded guilty last year to securities fraud for insider trading. Freeman has been cooperating with Manhattan U.S. Attorney Preet Bharara’s office and agents of the FBI in New York in their five-year insider probe dubbed “Perfect Hedge.”
Last April, former SAC analyst Jonathan Hollander agreed to settle U.S. Securities and Exchange Commission allegations that he traded on inside information about a pending takeover of the Albertson’s LLC grocery chain.
The SEC alleged that Hollander tipped others about the acquisition and that he and others earned $95,807 in illegal profits. Hollander, who was trading in his personal account, agreed to pay more than $222,000, according to his lawyer, Aitan Goelman.
Horvath, and his co-defendants, Level Global Investors LP co-founder Anthony Chiasson and ex-Diamondback Capital Management LLC portfolio manager Todd Newman, are accused of participating in a conspiracy with other portfolio managers, analysts and insiders at technology firms who swapped tips between 2007 and 2009.
The case is U.S. v. Newman, 12-CR-00124, U.S. District Court, Southern District of New York (Manhattan).
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