SAC Manager Steinberg’s Trial Begins With Jury SelectionPatricia Hurtado
SAC Capital Advisors LP fund manager Michael Steinberg’s insider-trading trial began with a Manhattan federal judge questioning more than 50 people out of a pool of about 100 potential jurors about their views on Wall Street, fund managers and financial fraud.
U.S. District Judge Richard Sullivan, who is presiding over the case, dismissed 15 people yesterday, including a man who worked at a hedge fund and a woman who said she worked in investor relations for an Internet company in which SAC is an investor. The judge said jury selection may finish today.
Steinberg, 41, is charged with one count of conspiracy to commit securities fraud one and four counts of securities fraud stemming from what Manhattan U.S. Attorney Preet Bharara said was a scheme that ran from late 2007 to 2009 and reaped more than $1.4 million through trading on illegal tips on Nvidia Corp. and Dell Inc.
During questioning of potential jurors away from the pool, Sullivan asked one man if news reports about the case would impair his ability to be fair. Prosecutors were present as well as Steinberg and his defense team.
“It might,” the man replied. “There is fraud on Wall Street and big hedge funds are the primary instigators in people having low wages.”
Sullivan excused the man after pressing him as to whether he has a bias against Steinberg or anyone at SAC. “I think he did do it,” the man replied. “I think his boss should be there instead of him.”
The woman at the Internet company said she dealt with SAC fund managers and analysts who covered her industry and also said she’s familiar with other hedge funds that are part of the case, including Diamondback Capital Management LLC.
Jesse Tortora, a former analyst who worked for the Stamford, Connecticut-based fund, pleaded guilty and is scheduled to testify for the government against Steinberg.
“I would try to be fair,” the investor relations woman said. “I’m more concerned with my expertise dealing with hedge funds. I’d have opinions and bias after 15 years. I don’t know that I could separate what I know and feel about more from an insider-trading perspective.”
She, too, was dismissed by Sullivan.
A part-time actor and real estate agent who said he’d participated in the Occupy Wall Street movement was allowed to remain on the jury after the man assured Sullivan he could be fair to Steinberg.
“I’m just a dumb artist. I sang and performed Shakespeare,” the man said, describing his participation in Occupy Wall Street.
Steinberg’s trial is in the same courtroom where Martha Stewart and her broker, Peter Bacanovic, were tried in 2004 on charges stemming from an insider-trading probe.
Prosecutors allege Steinberg was part of a group of fund managers, analysts and insiders at technology companies who swapped nonpublic information.
To date at least six people have pleaded guilty and agreed to cooperate with the U.S., including Jon Horvath, Steinberg’s former research analyst. Prosecutors have said he will testify against his former boss.
Steinberg’s lawyer, Barry Berke, has said his client was “caught in the crossfire of aggressive investigations” and that his trades were based on “detailed analysis as well as information that he understood had been properly obtained through the types of channels that institutional investors rely upon on a daily basis.”
Bharara’s office cited Horvath’s tips in a federal insider trading indictment filed against SAC in July that accused it of reaping hundreds of millions of dollars in illicit profits in insider trading that went back as far as 1999.
SAC Capital offered a guilty plea to charges Nov. 8 as part of a record $1.8 billion settlement of the government’s investigation into insider trading at the firm.
The Stamford, Connecticut-based hedge fund agreed to close its investment advisory business as part of the accord to end both its prosecution and a money-laundering lawsuit filed by the Justice Department. The federal judge presiding over that case hasn’t decided whether to accept the plea.
Jonathan Gasthalter, a spokesman for SAC Capital at Sard, Verbinnen & Co., declined to comment on Steinberg’s case.
The case is U.S. v. Steinberg, 12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).