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May 16, 2014

Federal judge splits the difference in sentencing former SAC money manager to 3.5 years

As reported in this Wall Street Journal article, a federal district judge in a high-profile white-collar sentencing today imposed a prison term roughly half-way between what federal prosecutors and the defense sought.  Here are the basics:

A federal judge sentenced former SAC Capital Advisors LP portfolio manager Michael Steinberg to three and a half years in prison Friday, saying he hoped Wall Street would learn from this case. The term was well below what prosecutors had sought.

U.S. District Judge Richard Sullivan called the former senior SAC employee "a basically good man," citing evidence of his character supplied in 68 letters sent by his family and friends. But he also pointed to the seriousness of Mr. Steinberg's insider trading.  "They are crimes that go to the heart of living in an honest society and having a market system," he said during a hearing in Manhattan federal court.  Wall Street, he hoped, would "derive lessons."

Mr. Steinberg, 42 years old, is SAC's most senior former employee to be convicted of insider trading.  Prosecutors had asked for a sentence of 5¼ to 6½ years to send a strong deterrent message to the market.  Mr. Steinberg's lawyers had requested less than half that amount.

Mr. Steinberg was convicted in December on four counts of securities fraud and one count of conspiracy for trading on confidential information, handing prosecutors the first verdict from a federal jury to back up their allegations that there was insider trading at SAC.  There is a chance Friday's sentence won't stick.  A pending appeal in a related insider-trading case could bolster Mr. Steinberg's chances to overturn his conviction.

May 16, 2014 at 04:26 PM | Permalink

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