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