Former SAC Capital Advisors LP fund manager Michael Steinberg asked the judge presiding over his insider-trading trial to question potential jurors about what he described as an “intense media storm” surrounding his case.
In court papers filed yesterday and today in Manhattan, Steinberg also asked a federal judge to order prosecutors to disclose additional stocks, trades or co-conspirators they may include that weren’t described in the indictment.
Lawyers for Steinberg, who worked as a portfolio manager for SAC Capital’s Sigma Capital Management Ltd., said that many articles include “the widespread suggestion” that SAC Capital founder Steven A. Cohen “must have encouraged insider trading at SAC” and potential jurors should be questioned about their knowledge of news coverage of Cohen, Steinberg and SAC.
“The media’s intense focus on this information and its purported link to Mr. Cohen threatens to further prejudice Mr. Steinberg,” his lawyers said in a memo. “Potential jurors exposed to the reports of Mr. Cohen’s notoriety will be hard-pressed to ignore the media’s characterizations of Mr. Cohen and his connection to Mr. Steinberg in evaluating the significance of this aspect of the government’s proof.”
Allegations of insider trading at SAC Capital have been mentioned in at least 931 articles since September, and Steinberg was mentioned in at least 203, according to a memorandum filed today by defense lawyers Barry Berke, Steven Sperling and Robin Wilcox.
“For almost a year, stories about alleged insider trading involving Mr. Steinberg, Mr. Cohen, SAC and the legal troubles of others associated with SAC have saturated media outlets,” the lawyers said. “The coverage has not only been ubiquitous, but its qualitative content also has been inflammatory,” increasing the chance that jurors may not be impartial.
Steinberg is scheduled to face trial Nov. 18 before U.S. District Judge Richard Sullivan. He was charged in an indictment with one count of conspiracy and four counts of securities fraud for trading in Dell Inc. and Nvidia Corp. based on illicit tips provided to him by his analyst, Jon Horvath.
Steinberg is viewed by authorities as a potential witness against Cohen if he were ever to cooperate with prosecutors, his lawyers said in the filing.
Steinberg’s lawyers argue that in order for their client to receive a fair trial, prosecutors should give them more information sooner about what evidence they intend to present at the trial. Prosecutors currently plan to give defense lawyers the information just a month before trial.
Steinberg’s lawyers said they need time to review the thousands of pages of information the government has amassed in the case. For example, between 2007 and 2009, the time of the alleged insider-trading conspiracy, Steinberg executed more than 2.3 million trades involving more than 200 stocks.
Berke argues that he will have to review more than 1.1 million documents related to the SAC unit, including more than 33,000 communications between Steinberg and Horvath.
“Because Mr. Steinberg is alleged to have been a fourth-level tippee, and the alleged tipping chain permeated several different firms, Mr. Steinberg would also have to analyze for each alleged stock and trade a massive quantity of other communications,” Berke said.
This means defense lawyers may have to review more than 9.7 million documents of the approximately 23.9 million pages that the government has produced, Berke said.
Horvath, who was charged with being part of an insider-trading ring with other analysts and technology company employees, pleaded guilty in September and is cooperating with the U.S.
Julie Bolcer, a spokeswoman for Manhattan U.S. Attorney Preet Bharara, declined to comment on Steinberg’s request. Jonathan Gasthalter, a spokesman for SAC at Sard Verbinnen & Co., declined to comment on the defense lawyers’ motion.
The case is U.S. v. Steinberg, 12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).