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Good Friday perp walk for SAC's Michael Steinberg.

SAC trader Michael Steinberg arrested and charged with fraud.

FBI agents arrested longtime SAC Capital trader Michael Steinberg Friday morning at his Park Avenue apartment on insider-trading charges.  Steinberg is the most senior employee of SAC arrested to date.  Here's a list of everyone at SAC busted so far as the Feds push higher up the food chain in pursuit of Stevie Cohen.

"Research was nothing more than well-timed insider tips."



SAC Trader Charged With Fraud


Federal authorities, deepening a criminal insider-trading investigation, continued to work their way up the ranks at SAC Capital.  Early Friday morning, FBI agents arrested a longtime SAC Capital portfolio manager on insider-trading charges, making him the most senior employee of one of the nation's most prominent hedge funds to be snared in the government's sprawling probe.

Michael Steinberg, 40 years old, was led out of his building on New York's Park Avenue in handcuffs around 6 a.m.  Mr. Steinberg has worked at Stamford, Conn.-based SAC since 1997 and at its Sigma Capital Management unit in New York since 2003, dealing closely with SAC's billionaire founder Steven A. Cohen.  Wearing a white dress shirt, a black sweater and charcoal pants, Mr. Steinberg appeared at a brief hearing in Manhattan federal court and was released on a $3 million bond secured by his home.  He kept his hands in his lap and nodded in response to questions from the judge.

"Do you plead guilty or not guilty?," U.S. District Judge Richard Sullivan said.

"Not guilty, Your Honor," Mr. Steinberg said.

The SEC also filed a civil lawsuit against him in Manhattan federal court on Friday.

"Mr. Steinberg was at the center of an elite criminal club, where cheating and corruption were rewarded," Federal Bureau of Investigation Assistant Director-In-Charge George Venizelos said. "Research was nothing more than well-timed tips from an extensive network of well-sourced analysts."

The development underscores that the government continues to aggressively pursue SAC and its employees just two weeks after the hedge-fund firm agreed to pay a record $616 million civil penalty to settle two insider-trading lawsuits brought by the SEC.  SAC didn't admit or deny wrongdoing in either settlement.

Assistant U.S. Attorney Antonia Apps said that Mr. Steinberg was captured on a handful of secretly record telephone calls, but the government doesn't expect to use more than one at trial.  "This is a case based largely on cooperator testimony and documents," Ms. Apps said.

Here's the key paragraph re:sending a message to Cohen:

The government could seek to use Mr. Steinberg as a potential witness against Mr. Cohen if Mr. Steinberg ever were to cooperate, according to the people familiar with the probe and with the hedge-fund firm.  During his 16 years at SAC, he built trust with Mr. Cohen as an arbiter of analysts, able to assess their sometimes contradictory views and reliably advise Mr. Cohen on investment decisions, say people close to the firm's operations.

Continue reading...

ZH had a classic reaction:

We wish the best of luck to the Feds whose sentencing guidelines (if it ever comes to that) better have a greater adverse NPV than the untold amount of hush money waiting for Steinberg on the other side, when he comes out of minimum security prison in 5 to 7.



Good clip of Martoma's perp walk in December:

SAC's Matthew Martoma Appears In Federal Court



Photo: Steinberg arrested by FBI agents at his Park Avenue apartment Friday morning.


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Reader Comments (13)

I hope they horse-whip that criminal degenerate Steinberg until he pisses all over himself, then horse-whip him some more before looping a rope around his neck and hanging him from the nearest tree or light pole. For it is fascist scum like he who have destroyed capitalism, made a mockery of law and morality, and have thrown this country off a cliff. Enough is enough.
Mar 30, 2013 at 1:48 AM | Unregistered CommenterVoxVeritatis
Even if the DOJ puts Steve Cohen behind bars, let's be clear about the crime (insider trading) and the criminal (SAC).

Until we see the DOJ pursue charges of fraud or Libor rate manipulation against someone working for one of Covington & Burling's clients (e.g., Bank of America), you can file this one under "Plebe Appeasement."

If the DOJ wants to put a dent in its status as the butt of banana republic jokes with insider trading cases, it could start by investigating the massive trading in health care companies minutes before the Supreme Court's Obamacare decision shocked everyone.

Mar 30, 2013 at 11:38 AM | Registered CommenterCheyenne

You think he was arrested because he broke tthe "Law"- and tptb are just?

No. No.

Tptb got him because he knows too much. THEY are rounding up those scum, on "the quiet."Look around and see who is being taken out.

It is THEIR "Law" btw! They made it up, it's THEIR Game. NOT ours.
Don;t even go to THEIR Court of "Law" - THEY will change the rules at the drop of a hat, if they see you winning.

(Study online and Youtube: " The Straw Man" and "Your Name in ALL CAPS."

Study the foregin Language "Legalese"- and Law Dictionaries, esp. in a Public Libr, "Black's Law Dictionary" - It's expensive around $$$.
Mar 30, 2013 at 12:28 PM | Unregistered CommenterBen
Cheyenne, DB,

I know you guys are fans of David Stockman, so here's a FANTASTIC interview he just did today or yesterday with Chris Martenson. At about 4:00 he talks about Bernanke's idiocy and the insane belief that a depression would be the consequence of not bailing out Lehman Bros. Wait, woops. I mean, the consequence of not bailing out Goldman Sachs, AIG and all the rest of it. Stockman takes the conventional wisdom by the horns. Turns it into ground chuck. Tasty.
Mar 30, 2013 at 10:36 PM | Unregistered CommenterDr. Pitchfork
Wow! I"m listening to the interview as I type. Stockman just pointed out (something we've been crying in the wilderness for years) that AIG's insurance subsidiaries were SEPARATE legal entities under state regulation. The holding company's bait shop cum CDS division did not have legal claim to their assets.
Mar 30, 2013 at 10:41 PM | Unregistered CommenterDr. Pitchfork
Mar 31, 2013 at 12:30 AM | Unregistered CommenterSKINFLINT
Dr. P. Excellent post on Stockman. Great man however this is pretty dismal stuff. The question is how to take back the monetary system that has been hijacked. Ratigan touches on that as well during his commencement speech at Union. Just a Huge up hill push both ways. Thanks and a Blessed Easter to all!!
Mar 31, 2013 at 10:33 AM | Unregistered CommenterSKINFLINT
If the DOJ wants to put a dent in its status as the butt of banana republic jokes with insider trading cases, it could start by investigating the massive trading in health care companies minutes before the Supreme Court's Obamacare decision shocked everyone. Makes me wonder too Cheyenne if stocks in companies that rip out useful organs from live patients also went up.
Mar 31, 2013 at 10:46 AM | Unregistered CommenterSKINFLINT
Stockman has a new book out (The Great Deformation), as does his fellow Reagan Administration alumnus Paul Craig Roberts (The Failure of Laissez Faire Capitalism and the Economic Disslolution of the West). It'll be interesting to see where they ascribe blame for the fascist shit hole we find ourselves in.

As for the legalities of the bailouts of AIG's counterparties, I don't doubt that Stockman is correct. But our legal problems as a nation reach far higher than AIG, which is the tip of a very real constitutional crisis that's brewing, which I'll explain at length in an article to be posted soon.
Mar 31, 2013 at 10:53 AM | Unregistered CommenterCheyenne
But our legal problems as a nation reach far higher than AIG, which is the tip of a very real constitutional crisis that's brewing, which I'll explain at length in an article to be posted soon.

True. Look forward to reading it (I think).
Mar 31, 2013 at 12:06 PM | Unregistered CommenterDr. Pitchfork

Cohen’s Ex-Wife Has Racketeering Suit Against Him Reinstated


The ex-wife of SAC Capital Advisors LP founder Steven A. Cohen won reinstatement of most of a lawsuit in which she seeks $8.25 million in damages based on claims the hedge fund is “the product of an ongoing racketeering scheme” that engaged in insider trading.
Patricia Cohen’s July 2010 amended complaint was dismissed in 2011 for being filed after legal deadlines. A federal appeals court in Manhattan today ruled her lawsuit was filed in a timely manner, and that she validly stated claims her husband violated the Racketeer Influenced and Corrupt Organizations Act, as well as common law fraud and breach of fiduciary duty. A fourth claim was found to have been properly dismissed.
Apr 3, 2013 at 8:48 PM | Unregistered Commenterjohn
The FBI are anti-semitic for arresting poor mr. steinberg. Call the ADL and SPLC.
Apr 11, 2013 at 12:57 PM | Unregistered CommenterBig Ben

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