S.A.C. Capital Advisors fund manager Michael Steinberg was indicted by a federal grand jury on five counts of conspiracy and securities fraud as the U.S. government’s wide-ranging probe of insider trading at the $15 billion firm got one step closer to founder Steven A. Cohen.
Mr. Steinberg worked at S.A.C.’s Sigma Capital Management unit and is the most senior S.A.C. official to be charged. He was one of 15 portfolio managers handling technology, media and telecommunications stocks before being placed on leave in September, said a person with knowledge of the matter. His lawyer, Barry Berke, said his client did nothing wrong and will appear in New York federal court on Friday.
In November, the U.S. indicted Mathew Martoma, a former fund manager for S.A.C.’s CR Intrinsic Investors unit, in what prosecutors called the biggest insider-trading scheme in history. Manhattan U.S. Attorney Preet Bharara said Mr. Martoma helped S.A.C. make $276 million on illegal tips about an Alzheimer’s drug by trading in shares of Elan Corp. and Wyeth. He has pleaded not guilty to the charges and is awaiting trial.
On Thursday, a Manhattan federal judge expressed skepticism at a provision of a $602 million settlement by S.A.C. with the Securities and Exchange Commission. S.A.C. will have to wait to learn whether the proposed insider-trading accord can go forward, after U.S. District Judge Victor Marrero raised questions over whether the hedge fund should be allowed to avoid admitting it did anything wrong as part of the deal.
The accord would resolve SEC claims that S.A.C. and CR Intrinsic profited from alleged illegal tips received by Mr. Martoma about the Alzheimer’s drug. As part of the March 15 agreement, the SEC sued Sigma, describing the passing of inside information and expanding what the U.S. had previously said about the insider trading at S.A.C.