SAC Capital Advisors LP is stepping up its public defense as the arrest of Michael S. Steinberg brings the government’s probe closer to the hedge-fund's billionaire founder, Steven A. Cohen.
Within an hour of the accusations, SAC issued a statement defending the 16-year veteran of the Stamford, Connecticut-based firm. Steinberg was arrested on the morning of March 29 and accused of insider trading at Cohen’s $15 billion hedge fund SAC. It was the first time SAC had come out publicly in support of an employee who had been charged in the government’s wide- ranging investigation of insider trading.
“Mike has conducted himself professionally and ethically during his long tenure at the firm,” Jonathan Gasthalter, a spokesman SAC, said in the statement. “We believe him to be a man of integrity.”
Steinberg, who turns 41 this week, is the longest-serving SAC employee to be accused of insider trading while at the firm, and one of Cohen’s most trusted managers, having joined the firm in 1997.
In an indictment unsealed March 29, Steinberg was charged by a federal grand jury with five counts of conspiracy and securities fraud. He is accused of being part of a conspiracy that began in late 2007 and continued until 2009. The U.S. said he received and traded on illegal tips from Jon Horvath, a former analyst at Stamford, Connecticut-based SAC, on technology companies Dell Inc. and Nvidia Corp.
Steinberg has pleaded not guilty. Barry Berke, Steinberg’s lawyer, said his client is “caught in the crossfire of aggressive investigations” and that he did nothing wrong. Cohen hasn’t been accused of wrongdoing.
Steinberg is one of two portfolio managers who received and traded on inside information from Horvath, according to a filing by the U.S. Securities and Exchange Commission last month. Bloomberg News identified the second manager as Gabriel Plotkin.
SAC didn’t issue a statement when Horvath was charged in January 2012. The firm did defend Plotkin after Bloomberg News identified him, saying he did nothing wrong and built his career on legitimate research. Unlike Steinberg, Plotkin hasn’t been charged by the government.
Steinberg worked at SAC’s Sigma Capital Management unit and was one of 15 portfolio managers handling technology, media and telecommunications stocks before he was put on paid leave in September.
Arthur Levitt, former chairman of the U.S. Securities and Exchange Commission, said the arrest of Steinberg indicates that the government now has Cohen “in its cross hairs.” Levitt talked with Bloomberg’s Tom Keene and Joe Brusuelas on Bloomberg Radio’s “Bloomberg Surveillance.”