SAC Fund Manager Found Guilty in Insider Trading Case

by

Michael Steinberg, the most senior employee yet to be tried in the government’s sweeping insider trading investigation into hedge fund SAC Capital Advisors, has been found guilty on five counts of securities fraud and conspiracy by a federal jury in Manhattan.

The verdict — delivered after less than two days of deliberations — comes only a month after SAC Capital pleaded guilty to fraud charges as part of a $1.8 billion deal to resolve a long-running insider trading probe that has embroiled the massive hedge fund and its billionaire founder, Steven A. Cohen.

In all, eight SAC employees have faced criminal charges. Six have pleaded guilty to securities fraud, and an eighth employee, Mathew Martoma, faces trial in January.

Steinberg, a 41-year-old portfolio manager, was accused of illegally trading stocks of the technology companies Dell and Nvidia after receiving confidential information about their earnings. The trades — which were said to generate profits of $1.4 million — are among those cited by the Securities and Exchange Commission in a separate civil case against Cohen, accusing him of failing to properly supervise his employees.

Last month, FRONTLINE published an exclusive video deposition in which the hedge fund titan described insider trading laws as vague and asked for an explanation of the SEC rule that prohibits such trading.

Today’s verdict represents one of the government’s most high-profile victories in its effort to stem insider trading on Wall Street. Since 2009, the United States attorney’s office in Manhattan has secured 76 convictions at trial without losing a case.

The government’s crackdown is the focus of next month’s FRONTLINE investigation, To Catch A Trader. The film premieres on-air and online Jan. 7. Watch a preview below.

Michael Steinberg, center, exits Manhattan federal court on Friday, March 29. 2013, in New York. Steinberg, a senior portfolio manager for SAC Capital Advisors, one of the largest U.S. hedge funds, was accused of making $1.4 million illegally in a widening insider trading probe involving an investment company founded by billionaire businessman Steven A. Cohen. (AP Photo/Louis Lanzano)
blog comments powered by Disqus

In order to foster a civil and literate discussion that respects all participants, FRONTLINE has the following guidelines for commentary. By submitting comments here, you are consenting to these rules:

Readers' comments that include profanity, obscenity, personal attacks, harassment, or are defamatory, sexist, racist, violate a third party's right to privacy, or are otherwise inappropriate, will be removed. Entries that are unsigned or are "signed" by someone other than the actual author will be removed. We reserve the right to not post comments that are more than 400 words. We will take steps to block users who repeatedly violate our commenting rules, terms of use, or privacy policies. You are fully responsible for your comments.

SUPPORT PROVIDED BY

NEXT ON FRONTLINE

Solitary NationApril 22nd

FRONTLINE on

ShopPBS
Frontline Journalism Fund

Supporting Investigative Reporting

Funding for FRONTLINE is provided through the support of PBS viewers and by the Corporation for Public Broadcasting. Major funding for FRONTLINE is provided by The John D. and Catherine T. MacArthur Foundation. Additional funding is provided by the Park Foundation, the Wyncote Foundation, and the FRONTLINE Journalism Fund with major support from Jon and Jo Ann Hagler on behalf of the Jon L. Hagler Foundation.PBSPark FoundationMacArthur FoundationwyncoteCPB

FRONTLINE   Watch FRONTLINE   About FRONTLINE   Contact FRONTLINE
Privacy Policy   Journalistic Guidelines   PBS Privacy Policy   PBS Terms of Use   Corporate Sponsorship
FRONTLINE is a registered trademark of WGBH Educational Foundation.
Web Site Copyright ©1995-2014 WGBH Educational Foundation
PBS is a 501(c)(3) not-for-profit organization.