*from www.bloomberg.com, Mar. 29, 2013 (To view original article click here.)
Take Away #1: SAC Capital Advisors LP fund manager Michael Steinberg was arrested by FBI agents as the probe of insider trading at the $15 billion firm got one step closer to founder Steve A. Cohen.
Key Facts and Figures:
- Steinberg, 40, worked at SAC’s Sigma Capital Management unit and is the most senior SAC official to be charged.
- Steinberg was one of the 15 portfolio managers handling technology, media, and telecommunications stocks before being placed on leave in September.
- Steinberg was taken into custody at 6 a.m. at his Manhattan home.
Take Away #2: In December, U.S. District Judge Richard Sullivan ruled Steinberg was an uncharged co-conspirator in a $72 million scheme.
Key Facts and Figures:
- The scheme also involved Level Global Investors LP co-founder Anthony Chiasson, ex-Diamondback Capital Management LLC portfolio manager Todd Newman.
- Chiasson and Newman were convicted in December by a federal jury in Manhattan and are scheduled to be sentenced by Sullivan on April 19.
- Also involved were analysts who obtained and swapped illegal tips about technology companies.
- According to internal emails and people familiar with the matter, Steinberg and SAC fund manager Gabriel Plotkin both were recipients of inside information.
- The inside information was passed to them by convicted SAC technology analyst Jon Horvath.
- Plotkin has not been accused of wrongdoing.
Take Away #3: The SEC said this month that Horvath funneled nonpublic information on technology stocks to two unidentified portfolio managers at Cohen’s hedge fund.
Key Facts and Figures:
- Both men then traded on the information, reaping more than $6 million for SAC Capital units.
- According to SAC emails, the men were Steinberg and Plotkin.
Take Away #4: Steinberg’s lawyer, Barry Berke, said his client did nothing wrong and that his client is “caught in the crossfire of aggressive investigations.”
Key Facts and Figures:
- In November, the U.S. indicted Mathew Martoma, a former fund manager for SAC’s CR Intrinsic Investors unit.
- U.S. Attorney Preet Bhara said Martoma helped SAC make $276 million on illegal tips about an Alzheimer’s drug by trading Elan Corp. and Wyeth LLC.
- Martoma has pleaded not guilty and is awaiting trial.
- Steinberg will appear in New York federal court later today, said Berke.
Take Away #5: Manhattan federal judge expressed skepticism at a provision of a $602 million settlement by SAC with the SEC.
Key Facts and Figures:
- Yesterday, U.S. District Judge Victor Marrero raised questions over whether the hedge fund should be allowed to avoid admitting it did anything wrong as a part of the deal.
- SAC will have to wait to learn if the proposed insider trading accord can go forward.
- The accord would resolve SEC claims that SAC and CR Intrinsic profited from alleged illegal tips received by Martoma about the Alzheimer’s drug.
Take Away #6: As a part of the deal, the SEC sued Sigma, describing Horvath’s passing of inside information and expanding what the U.S. had previously said about the insider trading at SAC.
Key Facts and Figures:
- Horvath was one of eight analysts and portfolio managers charged in January 2012 with being part of the illegal information exchange.
- Horvath pleaded guilty just weeks before he was set to go on trial with Chiasson and Newman.
- Horvath, who worked for Steinberg, pleaded guilty in September, admitting he provided illegal tips to his portfolio manager who traded on them.
- Horvath said he and his co-conspirators obtained material nonpublic information on Dell Inc. (DELL) in August 2008 and about Nvidia Corp. (NVDA) in May 2009 from insiders at the two companies.
Take Away #7: While Horvath never named Steinberg in court, prosecutors alleged during Chiasson and Newman’s trial that Steinberg was the recipient of Horvath’s tips.
Key Facts and Figures:
- The prosecutors said the tips earned Horvath’s hedge fund manager about $1.4 million.
- The SEC said in the March 15 complaint that the analyst’s tips on technology stocks reaped the fund more than $6 million.
- While Horvath never named Steinberg in court, prosecutors alleged during Chiasson and Newman’s trial that Steinberg was the recipient of the tips.
Take Away #7: Horvath, who worked at SAC’s Sigma unit from 2006 to 2011, is cooperating with the insider-trading investigation.
Key Facts and Figures:
- Steve Peikin, Horvath’s lawyer, declined to comment.
- During his plea, Horvath told the judge that he “agreed to obtain and share information about public companies.”
Take Away #8: During Chiasson and Newman’s trial, assistant U.S. attorneys provided evidence including SAC emails they say showed the Steinberg’s state of mind about the information he received from Horvath.
Key Facts and Figures:
- Two days before Dell was set to report second-quarter earnings, Horvath emailed Steinberg and another portfolio manager to warn that Dell would miss earnings estimates.
- “I have a 2nd hand read from someone at the company,” Horvath said in the Aug. 26 email, which provided details on gross margins, expenditures and revenue. “Please keep to yourself as obviously not well known.”
- Steinberg replied, “Yes normally we would never divulge data like this, so please be discreet. Thanks.”
- Judge Sullivan concluded that email and instant messages he reviewed showed that Steinberg could have known information he used for trades came form insiders.
Take Away #9: Jesse Tortora and Spyridon “Sam” Adondakis were also charged with being a part of the scheme and testified at the Chiasson and Newman trial as prosecution witnesses.
Key Facts and Figures:
- Jesse Tortora is a former analyst who worked for Newman and Spyridon “Sam” Adondakis once worked as an analyst for Chiasson.
- Both described for the jury how they swapped nonpublic information obtained form insiders at the technology companies.
- At a December hearing, Judge Sullivan read aloud an email from Horvath to Steinberg that mentions “JT” which prosecutors said was a reference to Jesse Tortora.
- “P.S. Keep the Dell stuff, especially on the down low,” Horvath said in the e-mail, “because JT asked me specifically to be extra sensitive with this information.”
- Apps told the judge that Steinberg took a short position in Dell stock, betting that it would drop, “in a matter of minutes” after receiving Horvath’s message.
- “Why would you need to keep this on the ‘down low’ if this stuff is from investor relations?” Sullivan said, adding: “That doesn’t look good.”
- The case is U.S. v. Steinberg, U.S. District Court, Southern District of New York (Manhattan).
*To view original article from www.bloomberg.com click here.