SAC Capital Advisors LP’s Michael Steinberg, convicted of insider trading in December, should be sentenced to no more than two years in prison, less than half the sentence recommended by the court’s probation department, his lawyers said.
Steinberg deserves leniency because he was tried “as a remote tipee, four levels removed from the insider tippers,” didn’t initiate the insider-trading conspiracy and didn’t know about or authorize any payments for insider information, said Barry Berke, his attorney, in a filing in federal court in Manhattan yesterday.
Steinberg was SAC’s longest-serving manager to be convicted of insider trading. A jury found him guilty of using illegal tips on technology stocks provided by his former securities analyst, Jon Horvath, to reap more than $1.4 million in illicit profit. The court’s probation department recommended a sentence of between 4 years and 3 months and 5 years and 3 months, Berke said in the filing.
Prosecutors argued Steinberg’s offense level, used to determine his sentence, should be enhanced to include trading by SAC head Steven Cohen and an automated trading account as part of Steinberg’s trading gains. That would lead to a sentence of as much as 6 1/2 years, according to the filing.
U.S. District Judge Richard Sullivan, who presided over the trial, has imposed some of the longest terms on convicted insider traders in the Manhattan courthouse. In 2011, he gave 10 years and four months to Zvi Goffer, an ex-Galleon Group LLC trader who was convicted of leading a scheme in which prosecutors said he made more than $10 million.
Sullivan also presided over a case involving the same illegal tips for which Steinberg was convicted. In that case, Sullivan sentenced Level Global Investors LP co-founder Anthony Chiasson, who was found guilty of using illegal tips to make more than $68 million, to 6 1/2 years while his co-defendant, former Diamondback Capital Management LLC manager Todd Newman, got a prison term of 4 1/2 years. Newman made about $3.8 million in illicit profits, the U.S. said.
“Mr. Newman played a central role in the conspiracy,” Berke said in the filing. “The same cannot be said about the case against Mr. Steinberg.”
The case is U.S. v. Steinberg, 12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).
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