insider-trading

  • 18 Dec 2013 at 5:57 PM

SAC’s Steinberg Is Going To Prison

This probably does not come as any more of a surprise to him than it does to anybody else, given (a) that prosecutors are batting 1.000 on insider-trading cases these days, and (b) that he passed out as soon as he saw the jury walk into the courtroom. Read more »

Michael Steinberg was furious after receiving an email in October 2010 from a research consultant he had hired, according to the lawyer for the SAC Capital Advisors LP portfolio manager. In the email, the consultant told his clients that the Federal Bureau of Investigation had contacted him about insider trading. Mr. Steinberg called the consultant and made him cry, according to the lawyer, Barry Berke. Mr. Steinberg was irate about the possibility that the consultant, John Kinnucan, had been feeding him illegal inside tips, Mr. Berke said. “[Mr. Steinberg said] ‘is this inside information you’re giving me?’” Mr. Berke told U.S. District Judge Richard Sullivan on Monday. “And [Mr. Kinnucan] is like ‘no, no, I swear, Mike, it’s not.’”…The content of Mr. Steinberg’s conversation with Mr. Kinnucan came out in another conversation that was recorded at the behest of the FBI. In that one, former SAC analyst Jon Horvath told ex-Level Global Investors LP analyst Spyridon “Sam” Adondakis that his boss, Mr. Steinberg, had ripped into Mr. Kinnucan after receiving the email. Unknown to Mr Horvath at the time, Mr. Adondakis was cooperating with the FBI, according to prosecutors. [WSJ]

Cohen is not likely to testify at Martoma’s trial next month, citing his Constitutional right against self-incrimination. But Martoma’s lawyers would like his testimony from last year to speak for him—and to show that Martoma had nothing to do with the trades that led to his indictment. In a pre-trial motion, Martoma’s lawyers cited Cohen’s statements that he elected to sell the firm’s stake in pharmaceutical company Wyeth LLC not because Martoma suggested he do so—but because former SAC trader Wayne Holman did. Holman, who ran the defunct Ridgeback Capital Management, had a $20 million consulting deal, and Cohen said that the week SAC sold Wyeth, Holman “was telling me he was selling his Wyeth.” [FINalternatives]

Pro: Cohen gets concrete evidence we’re working our tails off. Con: He rips our throats out for implicating him in the crime. Pro: His lips say “tell me.” Con: His eyes say, “keep your mouth shut.” Pro: I can maybe cut a deal with the prosecutors some day. Con: I may be driven out to the docks. Read more »

Lawyers for Michael Steinberg pressed a former stock analyst turned government witness about his motivations for testifying against the veteran SAC Capital Advisors LP portfolio manager, drawing a reluctant admission from the witness that he wanted to stay out of jail. Jesse Tortora, a former analyst at hedge fund Diamondback Capital LLC, told a jury in Manhattan federal court on Monday that he hoped to receive probation for cooperating with a wider government investigation into insider trading. That acknowledgment came after repeated, and sometimes contentious, questioning by Barry Berke, a lawyer for Mr. Steinberg. Mr. Tortora initially said that when agents from the Federal Bureau of Investigation showed up to question him at his parents’ house in Florida in 2010, his “main motive was to tell the truth.” But under cross-examination from Mr. Berke, Mr. Tortora said he was also motivated by the prospect of a lighter punishment. [WSJ]

The 37-year-old Tortora, testifying for the third day in the case against SAC top money man Michael Steinberg, said his big year at now defunct hedge fund Diamondback was 2008, when his compensation hit $2.5 million. He only made $800,000 in 2009 and left the firm that was founded by former SAC portfolio managers early in 2010. Tortora, who is living with his parents in Florida while he awaits sentencing for his cooperation in the Steinberg trial, said he has only $100,000 left from his years of living high as a hedge-fund analyst. While the financial crash decimated portfolios of millions of Americans in 2008, that was Tortora’s big year, when insider trading tips about Dell, among others, paid off. Steinberg traded on that insider tip and knew it was illegal, prosecutors allege. Tortora said he lost $400,000 day trading and “several hundred thousands” in Las Vegas on blackjack and sports betting. He said he has also spent $400,000 on legal fees since his arrest on insider trading charges. While at Diamondback, he also fed insider tips to his stepfather, who did not know they were illegal. “In general, he’s done poorly,” Tortora told the jury. “He has lost a good amount of money.” [NYP]

The government gave hints Thursday of its strategy in the criminal case against SAC Capital Advisors LP portfolio manager Michael Steinberg, disclosing that its first witness will be the hedge-fund firm’s chief financial officer, Daniel Berkowitz. The trial, which starts next week in federal court in Manhattan, could provide the most detailed look yet at the inner workings of the giant hedge fund. It comes on the heels of SAC’s landmark $1.8 billion settlement with the government over insider-trading allegations. [WSJ]