Ex-Diamondback Capital Management LLC analyst Jesse Tortora testified he was the conduit for illicit tips on technology companies that SAC Capital Advisors LP fund manager Michael Steinberg later traded on.
Tortora said that he passed the inside information to his friend, Jon Horvath, who was Steinberg’s analyst at SAC. The two friends were part of a group of hedge-fund analysts who agreed to pool their illegal tips and funnel them to their bosses.
Tortora and Horvath both pleaded guilty and agreed to cooperate with the U.S. Tortora is the first of four cooperators who prosecutors said will testify against Steinberg, whose insider-trading trial started yesterday in federal court in Manhattan. Tortora also testified last year against his ex-boss, Diamondback fund manager Todd Newman, who was convicted by a federal jury in December.
“I told Jon I was passing or passed inside information to Todd Newman and he in turn told me he was communicating that information to Mike Steinberg,” Tortora told a jury today. “He told me he directly worked for Mike Steinberg and that Mike had status at SAC. He told me that Mike was ‘Steve Cohen’s right-hand man.’”
Billionaire Cohen is the founder and owner of SAC. He hasn’t been charged with a crime.
Steinberg, 41, charged with conspiracy and securities fraud, is the first SAC employee to go to trial of the eight who have been charged with insider trading by the U.S. At least six have pleaded guilty and are cooperating with the government. Steinberg is the longest-serving SAC employee of those the U.S. has charged in its insider-trading probe.
The case is U.S. v. Steinberg, 12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).
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