Ex-SAC Manager Steinberg Cites ‘Media Storm’ in CasePatricia Hurtado
A lawyer for former SAC Capital Advisors LP fund manager Michael Steinberg told a federal judge that the “media storm” of coverage of his case and founder Steven A. Cohen may hurt his chances of getting a fair trial.
Barry Berke, the lawyer, today asked U.S. District Judge Richard Sullivan in Manhattan to use a questionnaire and closely question potential jurors about media accounts and publicity about the case before Steinberg’s Nov. 18 insider-trading trial.
Hundreds of articles have been written about his client’s case, which is far different from the related trial of Level Global Investors LP co-founder Anthony Chiasson and former Diamondback Capital Management LLC fund manager Todd Newman, the attorney said. Both men were convicted of insider trading in December. Sullivan presided over that trial.
“I do think the press is different from the Chiasson trial,” Berke told the judge. “There has been a lot of extraneous information that has been written about this case, SAC, Steve Cohen, SAC people who’ve pleaded guilty and other rumors.”
Steinberg, the long-serving portfolio manager to be charged in the government’s wide-ranging probe of insider trading at Cohen’s hedge fund, was indicted by prosecutors in the office of Manhattan U.S. Attorney Preet Bharara unsealed on March 29.
The U.S. alleges he engaged in insider trading in Dell Inc. and Nvidia Corp. based on illicit tips provided to him by his analyst, Jon Horvath.
Berke, a partner at Kramer Levin Naftalis & Frankel LLP, said 203 articles have been published mentioning Steinberg and another 931 discuss SAC and mention his client.
Forbes Magazine called Cohen “public enemy number one” and Vanity Fair referred to him as the “O.J. Simpson of Insider Trading,” the defense lawyer said.
Articles include descriptions of “the intrigue surrounding every legal development in the government’s pursuit of Mr. Cohen and SAC” and “the steady drumbeat accompanying the constant speculation as to whether criminal or other charges will be brought against Mr. Cohen or SAC,” Berke said in court papers.
The U.S. has been investigating Cohen, people familiar with the matter said who spoke on the condition of anonymity because it isn’t public.
Berke argued in court papers that a jury hearing Steinberg’s case may be tainted by prosecutors’ decision whether to charge Cohen with insider trading, saying it could be made just before Steinberg goes to trial.
Sullivan today said he didn’t think a jury questionnaire is warranted.
“Your argument is that there’s been a little more publicity,” he said. “I’m not sure it’s categorically different.”
The judge said he’s inclined not to use a questionnaire and prefers to individually question prospective jurors if they indicate they have read about the case.
Berke also asked Sullivan to order prosecutors to disclose additional stocks, trades or alleged co-conspirators they may include that weren’t described in the indictment. He asked for the information to be turned over three months before trial.
He argued in court papers that the defense needs time to review the thousands of pages of information the government has amassed. From 2007 to 2009, the time of the alleged insider-trading conspiracy, Steinberg executed more than 2.3 million trades involving more than 200 stocks.
Assistant U.S. Attorney Antonia Apps said today the government planned to give defense lawyers the information a month before the trial. She said the information the government was still reviewing isn’t not an “avalanche” of new trades and significant information.
“It’s very small, marginal, incremental number of stocks,” Apps said. “It does not create an avalanche of work for Mr. Burke.”
Sullivan today also directed the government to turn over the memo outlining some of the government’s evidence, two months before trial.
“If it does create an avalanche of work, I might entertain a motion to adjourn the trial,” Sullivan said.
Steinberg, who has pleaded not guilty, was one of 15 SAC portfolio managers handling technology, media and telecommunications stocks before being placed on leave in September, said a person with knowledge of the matter who asked not to be identified because the matter isn’t public. He faces as long as 20 years in prison if convicted.
Steinberg is accused of one count of conspiracy and four counts of securities fraud. Horvath, his analyst, pleaded guilty and is cooperating with the U.S.
Jonathan Gasthalter, a spokesman for SAC at Sard Verbinnen & Co., declined to comment on the defense motion.
The case is U.S. v. Steinberg, 12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).