insider-trading

Horvath took home a relative pittance of $416,084 of compensation in 2007, compared with Steinberg’s $5.1 million. He rang in the New Year vowing to do better. He cultivated a relationship with Jesse Tortora, an analyst at a hedge fund called Diamondback Capital, whom he’d met through a former roommate in San Francisco. Tortora was well connected and started funneling him inside information about Dell, which, Horvath later testified, he passed up to Steinberg. [BusinessWeek / Sheelah Kolhatkar]

Mathew Martoma, the latest employee of Steven A. Cohen’s SAC Capital Advisors to face trial on insider trading charges, lost a bid on Friday to delay his trial, which is scheduled to start on January 6. Martoma’s lawyer, Roberto Braceras, told U.S. District Judge Paul Gardephe in New York that the conviction of SAC portfolio manager Michael Steinberg on Wednesday had ignited a new round of media stories that often mentioned Martoma, raising the possibility jurors could be tainted by the coverage. He asked for a two-week delay, adding that they needed the extra time to prepare for trial in light of several pending motions. But Gardephe said he had already postponed the trial from the autumn to January “extremely reluctantly,” adding that the intense media attention on SAC would likely continue. “The fact of the matter is, there is a piece of news about SAC nearly every day,” he said. [Reuters]

As of Monday morning, SAC trader Michael Steinberg was innocent against charges of insider trading in the eyes of a juror named Demethress Gordon. But on Monday evening, Gordon “attended a screenwriting class that happened to focus on the subtext of characters’ actions.” And then this happened: 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]

Earlier in the day, before Mr. Berke began his cross-examination, Mr. Horvath testified that after Diamondback and two other hedge funds were raided by federal authorities in fall 2010, Mr. Steinberg coached him about how to talk to the Federal Bureau of Investigation if approached by any agents. Mr. Horvath said his former boss told him if the F.B.I. asks about the kind of information Mr. Tortora provided on Dell, just say it was “O.K.” Mr. Horvath said Mr. Steinberg flew to a conference he was attending in Arizona to personally deliver that message. “He just walked straight up to me,” Mr. Horvath said, adding that his then boss didn’t even say hello before bringing up the F.B.I. [Dealbook]

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 »