Jury finds SAC Capitol Advisors' Michael Steinberg guilty
Michael Steinberg, a top portfolio manager at Steven A. Cohen's SAC Capital Advisors hedge fund, was found guilty Wednesday on charges that he traded on insider information.
The verdict, delivered in the fifth week of trial, was the latest victory for federal prosecutors in a four-year crackdown on Wall Street insider trading that has resulted in convictions of 77 people.
Steinberg closed his eyes and put his head back when the first guilty finding was read. Friends and family sitting behind him gasped and held each other, with some covering their mouths and others crying.
The verdict was delayed slightly when Steinberg fainted as it was about to be read. Jurors left the courtroom while he was attended to by paramedics and then returned to the courtroom.
Steinberg will be sentenced on April 25, the judge 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," U.S. Attorney Preet Bharara said.
The verdict came a month after SAC Capital agreed to pay $1.2 billion and plead guilty to fraud charges stemming from a long-running probe of insider trading at Cohen's hedge fund.
Steinberg, who worked in SAC's Sigma Capital Management division, was one of eight employees at SAC to face criminal charges for insider trading and the first of two to fight them at trial. A former SAC portfolio manager, Mathew Martoma, is scheduled to face trial Jan. 6.
"We will continue to work around-the-clock with the U.S Attorney's Office in Manhattan until traders and portfolio managers everywhere stop using inside information as their edge," FBI Assistant Director in Charge George Venizelos said.
Six others have pleaded guilty to charges relating to insider trading, including Jon Horvath, an SAC analyst who prosecutors said supplied Steinberg with nonpublic information about companies, including Dell Inc and Nvidia Corp.
Horvath, who cooperated with the government in hopes of avoiding jail time, became a star witness in the case against Steinberg, testifying over the course of nine days how his boss pushed him to get "edgy, proprietary'' information.
Horvath, 44, was part of what prosecutors called a "corrupt circle'' of research analysts who cultivated insider information and shared it with each other in order to make trading recommendations to their bosses.
Steinberg's lawyer, Barry Berke, sought throughout the trial to call Horvath's credibility into question, saying on Monday that he chose to "point the finger'' at Steinberg only on the eve of his own trial and in a bid to avoid prison.