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December 19, 2013

Another high-profile insider trading conviction tees up another high-profile federal sentencing

As reported in this New York Times article, headlined "Former SAC Trader Is Convicted of Insider Trading," federal prosecutors got another notable conviction yesterday in a high-profile setting:

Prosecutors lacked the incriminating wiretaps that underpinned past insider trading cases. The emails pointed to no smoking gun.  And the government’s star witness, a felon who testified to avoid prison time, fumbled his way through five days of cross-examination.

And yet a federal jury in Manhattan on Wednesday still convicted Michael S. Steinberg, the highest-ranking employee at SAC Capital Advisors to stand trial for insider trading.  The verdict, delivered minutes after Mr. Steinberg, 41, fainted in the courtroom, underscored the futility of challenging the government’s crackdown on some of Wall Street’s most vaunted hedge funds.

On the eve of trial, prosecutors conceded that the case was not a slam dunk.  But tapping into an anti-Wall Street sentiment — in opening arguments the lead prosecutor claimed that Mr. Steinberg broke the law “to get an illegal edge over ordinary investors who played by the rules” — apparently resonated with a jury of nine women and three men, including two accountants and a former postal worker.

The verdict hands the government a signature victory in its pincerlike pursuit of SAC, the giant fund run by the billionaire stock picker Steven A. Cohen.  Coming just weeks after SAC pleaded guilty to insider trading charges and agreed to pay a record $1.2 billion penalty, Mr. Steinberg’s conviction further clouds the future of a firm that was once the envy of Wall Street.  And it may also embolden federal authorities in their decade-long investigation of SAC.

Here are the post-conviction and sentencing basics noted in this article:

Judge Sullivan set Mr. Steinberg free on bail until his April 25 sentencing.  Mr. Steinberg faces a maximum of 85 years in prison, but will almost certainly receive a sentence of only a few years.  Mr. Steinberg’s lawyer, Barry H. Berke, did not immediately comment on the verdict but is expected to appeal.

December 19, 2013 at 08:46 AM | Permalink

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It's possible to imagine a more biased presentation than this NYT article, but you'd have to go some. I wonder if it might be the case that the jury bought less into "anti-Wall Street sentiment" than into the actual evidence, not one grain of which is presented in this excerpt.

Posted by: Bill Otis | Dec 19, 2013 11:49:59 AM

Bill, you shouldn't blame the NYT for this excerpt. The article has more detail:

Over the following weeks, Ms. Apps highlighted scores of emails and instant messages from Mr. Steinberg. She also called 13 witnesses, none more important than Jon Horvath, who once worked under Mr. Steinberg at SAC and was on the witness stand for nine days.

Mr. Horvath, a 44-year-old native Swede who potentially faces deportation, said he testified because “I hope to avoid jail time.”

At the heart of the testimony was Mr. Horvath’s claim that Mr. Steinberg pressured him to come up with “edgy” and “proprietary” information about the technology stocks.

“I thought he wanted me to cultivate sources of nonpublic information,” that is, violate insider trading laws, Mr. Horvath said, adding that he feared for his job. “I thought he’d fire me.”

Still, Mr. Steinberg, who did not testify, was at the end of a five-person chain of information that started with an insider at Dell and wound its way to Mr. Horvath and then Mr. Steinberg. And during a bruising cross-examination by Mr. Berke, Mr. Horvath conceded that Mr. Steinberg never explicitly told him to break the law by getting inside information.

But the testimony still proved damaging. Mr. Horvath recalled how, after other hedge funds were raided by federal authorities in fall 2010, Mr. Steinberg flew to a conference in Arizona to coach Mr. Horvath about answering questions from the F.B.I.

“He just walked straight up to me,” Mr. Horvath said, adding that his then boss didn’t even say hello before bringing up the F.B.I.

Posted by: Thinkaboutit | Dec 19, 2013 12:59:41 PM

Bill.

100% correct. That is exactly what I came to say. That is not news journalism, that is carrying the water for the banking industry. Regardless of whether on agrees with verdict of not there is nothing even-handed about that article. Disgusting.

Posted by: Daniel | Dec 19, 2013 5:37:59 PM

Vile feminist male running dog prosecutor has a problem himself. This is an Obama hitman, and an America hater. No one should be supporting him who has the slightest feeling of patriotism.

"Mr. Bharara is rumored to be independently wealthy, the result of an early investment in his younger brother’s company, Quidsi, the parent of Diapers.com and Soap.com, which was sold to Amazon.com for $540 million in 2010, as DealBook’s Peter Lattman noted at the DealBook conference on Tuesday."

Insider trading is lawyer code for sharp business practice. It is not a crime in most other country. Such trading benefits the investor, and there are newsletter tracking the activity of insiders. It is a vile feminist pretext to plunder the productive male.

In this case, he failed to supervise his subordinates who engaged in this vaguely defined, vile feminist pretext to plunder the productive male. Members of Congress enter dirt poor, emerge millionaires. The Clintons traded on beef commodities, a subject well covered at Yale Law School. The hypocrisy of this charge is a shock to the conscience of everyone who is not a fellow traveler of the vile feminist lawyer. It is a witch hunt.

Naturally, the defense refuses to go after the vile feminist lawyer and its male running dogs seeking the destruction of its client. It should have started with total e-discovery of the prosecutor, the judge and all those accountants on the jury. All child porn should have been referred to the FBI. All insider trading activity should have been referred to the SEC, with a motion for a mistrial, to be repeated whenever the vile feminist piece of treasonous filth bring charges again. However, the defense is likely to have been trained in the prosecutor's office, likely has friends there, and will never attack the source of its jobs.

I am shocked at the naivete of the supporters of this unAmerican prosecutor, this vile feminist male running dog, Ivy indoctrinated Obama appointee. He has caused a serious breach of diplomatic protocol, arresting an immune Indian diplomat and having his agents strip search her. No doubt, India will be forced to now do the same to many Americans, thanks to this over-reaching Ivy indoctrinated member of the criminal cult enterprise. He sparked protest in India.

It needs to resign.

Posted by: Supremacy Claus | Dec 20, 2013 1:13:15 AM

http://www.sec.gov/answers/insider.htm

Go there. It is filled with totally vague terms, mind reading, and feminist lawyer pretext to plunder the productive male, the one that can lead other investors to greater, faster wealth, by his insider knowledge.

Posted by: Supremacy Claus | Dec 20, 2013 1:25:53 AM

"Updated, 8:50 p.m. | Prosecutors lacked the incriminating wiretaps that underpinned past insider trading cases. The emails pointed to no smoking gun. And the government’s star witness, a felon who testified to avoid prison time, fumbled his way through five days of cross-examination.

And yet a federal jury in Manhattan on Wednesday still convicted Michael S. Steinberg, the highest-ranking employee at SAC Capital Advisors to stand trial for insider trading.?\"

Why on this God's earth would the defense traitor ever allow his client to be subjected to the left wing, biased, hate filled jury made of horrible New Yorkers? What overcame this idiot?

Posted by: Supremacy Claus | Dec 20, 2013 1:36:07 AM

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