SAC Capital Advisors LP portfolio manager Michael Steinberg, who faces a criminal insider-trading trial in November, asked to question witnesses in a related civil lawsuit by the U.S. Securities and Exchange Commission.
Steinberg is defending both a criminal case brought by the U.S. attorney in New York and a civil lawsuit by the SEC. In a court filing today in the SEC case, Steinberg asked a judge for permission to question witnesses and review documents. Gaining access to witnesses and evidence in the SEC’s case may help Steinberg defend himself against criminal charges.
“The U.S. Attorney’s Office and the SEC chose to simultaneously charge Mr. Steinberg with serious criminal and civil violations of the federal securities law,” his lawyer, Barry Berke, said in a filing today in the SEC’s lawsuit.
Steinberg, whose conspiracy and securities fraud trial is scheduled for Nov. 18, is accused of trading on inside tips on Dell Inc. and Nvidia Corp. from SAC analyst Jon Horvath. The scheme generated $1.4 million in profits, prosecutors say.
Steinberg, who denies wrongdoing, is one of eight current and former SAC employees to be charged with insider trading and is the longest-serving employee to face charges. The fund itself was indicted by the U.S. on July 25. Prosecutors said SAC allowed employees to engage in insider trades that generated hundreds of millions of dollars over a decade.
Stamford, Connecticut-based SAC has pleaded not guilty.
Prosecutors previously asked U.S. District Judge Harold Baer in Manhattan, who is presiding over the SEC’s civil suit, to halt proceedings in that case until after the criminal trial concludes. Assistant U.S. Attorney Antonia Apps said Steinberg shouldn’t be allowed to exploit civil proceedings to gain premature access to evidence in the criminal case.
In their court filing today, Steinberg’s lawyers in the civil suit said they want to question certain witnesses under oath, including Dell and Nvidia employees and individuals who testified for the U.S. at prior insider-trading trials.
The lawyers didn’t ask to question Horvath, who has pleaded guilty and is cooperating with prosecutors.
Last year, another judge allowed former Goldman Sachs Group Inc. director Rajat Gupta, then facing criminal insider charges, to question witnesses in a related civil case. Gupta was later convicted in the criminal case and sentenced to two years in prison.
The U.S. says Steinberg, who worked at SAC’s Sigma Capital Management unit, was part of a group of fund managers and analysts who traded on illegal tips from insiders at technology companies.
The criminal case is U.S. v. Steinberg, 12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).