SAC’s Steinberg Wins Dismissal of SEC Insider Trading Case

  • Ruling means fund manager is cleared of all wrongdoing claims
  • Agency's move follows prosecutors dropping criminal charges

Michael Steinberg, a former fund manager at SAC Capital Advisors LP, is free and clear of all allegations that he traded on insider tips after a 3 1/2-year fight with prosecutors and regulators.

A Manhattan federal judge on Friday granted the dismissal of the U.S. Securities and Exchange Commission’s insider-trading lawsuit against Steinberg following an October decision by federal prosecutors to abandon the criminal case against him.

For Steinberg, who was the longest-serving employee at SAC Capital to be convicted in the U.S. probe of insider trading, the dismissal is the final victory in his years-long battle against the U.S. government. He was found guilty in 2013 of an insider scheme involving tech stocks and sentenced to 3 1/2 years in prison. After a federal appeals court reversed the convictions of two fund managers in a related case, the government in October dropped charges against Steinberg as well as six other men who pleaded guilty and cooperated in the case.

Barry Berke, a lawyer for Steinberg, didn’t immediately respond to voice-mail and e-mail messages left seeking comment on the SEC’s decision to dismiss the case.

The 2014 appeals court ruling made insider-trading prosecutions more difficult. The U.S. Supreme Court declined to hear the government’s challenge of the appeals court decision.

The SEC decision signals that the regulator recognizes it faces the same hurdles in pursuing civil insider-trading cases as criminal prosecutors do.

Steinberg, who handled technology, media and telecommunications stocks at SAC Capital’s Sigma Capital Management unit, was accused of trading on illegal tips on technology stocks provided by his former securities analyst. He denied wrongdoing.

On Nov. 25, the SEC withdrew an industry ban that was tied to now-rescinded criminal charges against Steinberg. With the ban dropped, he is free to start managing money again.

SAC pleaded guilty in 2013 and paid a record $1.8 billion fine to resolve U.S. claims over insider trading. It changed its name to Point72 Asset Management LP and agreed to manage only founder Steven Cohen’s money. Cohen wasn’t charged with wrongdoing.

U.S. District Judge Shira Scheindlin, who issued Friday’s order, presided over the SEC’s suit against Steinberg, hedge fund managers Todd Newman and Anthony Chiasson, and the six analysts and company insiders who pleaded guilty and cooperated against them. Scheindlin dismissed SEC cases against Newman and Chiasson in October and more recently dismissed cases against at least three of the cooperators.

In October, Manhattan U.S. Attorney Preet Bharara abandoned the government’s prosecution against all nine men after the Supreme Court declined to hear the government’s challenge of an appeals court’s decision overturning the convictions of Newman and Chiasson.

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