SAC Capital Advisors LP fund manager Michael Steinberg told the analyst who gave him inside tips on Dell Inc. that the fund’s founder, Steven A. Cohen, wasn’t aware they were obtained illegally.

Steinberg concealed the true source of the tips, Jon Horvath, the former SAC analyst who worked for him, told jurors in the federal insider-trading trial in Manhattan. Horvath said Steinberg told him at SAC’s Sigma Capital Management offices in Midtown Manhattan that he had told Cohen that the trading recommendations were based on “industry contacts” and “supply chain checks.”

“I was in Mike’s office and he said, ‘I just got off the phone with Steve and I was telling him about Dell,’” Horvath testified yesterday. “I kind of cringed, because I didn’t want to be part of this conversation. Mike said, ‘I told him you had a Dell supply-chain check.’”

Steinberg, 41, who is charged with conspiracy and four counts of securities fraud, is the first of eight current or former SAC employees charged by the U.S. to go to trial. He is accused by prosecutors in the office of Manhattan U.S. Attorney Preet Bharara of earning more than $1.4 million in illegal profits in Dell and Nvidia Corp. by trading on tips Horvath got from a group of friends from 2007 to 2009.

$1.8 Billion Settlement

The e-mails presented in Steinberg’s trial provided a new glimpse into the workings at SAC, the Stamford, Connecticut- based hedge fund founded and owned by billionaire Cohen. SAC agreed to close its investment advisory business as part of a $1.8 billion deal announced Nov. 4 to end a criminal probe and a money-laundering lawsuit filed by the Justice Department. Bharara has called SAC “a veritable magnet for market cheaters.” Cohen hasn’t been charged with a crime.

Assistant U.S. Attorney Antonia Apps asked Horvath yesterday why he cringed when Cohen’s name was mentioned during the conversation in November 2008.

“Because Mike was kind of my buffer,” Horvath responded. “I didn’t want to be there to update Steve all the time. I didn’t want that responsibility. I didn’t want to get involved.”

Steinberg reassured him, saying, “Don’t worry, I didn’t let Steve know you have a good Dell check through Jesse Tortora, I told him you had good data research points,” Horvath said, referring to a Diamondback Capital Management LLC analyst who was his primary source of inside information.

Dell Tip

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