Former S.A.C. Capital Advisors hedge fund manager Michael Steinberg was sentenced to 3.5 years in prison for insider trading on Friday, capping one of the biggest victories for prosecutors who spent seven years investigating the hedge fund and its boss, Steven A. Cohen.
Mr. Steinberg, who handled technology, media and telecommunication stocks at S.A.C. Capital's Sigma Capital Management unit, was the longest-serving employee at the hedge fund convicted in the U.S. probe. He was found guilty in December of an insider scheme involving tech stocks that garnered $1.8 million in illegal profits.
Prosecutors have won convictions against eight managers and analysts in their investigation of S.A.C. Capital, amid a broader crackdown on market cheating at hedge funds, publicly traded companies and so-called expert-networking firms. S.A.C. Capital last year reached a $1.8 billion settlement with the U.S., pleading guilty to making hundreds of millions of dollars in illegal profits and fostering a culture of criminality.
Mr. Steinberg was also fined $2 million and ordered to forfeit $365,000 as part of his sentencing. The probe of his hedge fund never reached Mr. Cohen, who hasn't been charged with any wrongdoing. S.A.C., however, ceased being a money manager for outside investors as part of the guilty plea, and has since shed its name. In April, S.A.C. Capital changed its name to Point72 Asset Management LP.
Mathew Martoma, a former fund manager for S.A.C.'s CR Intrinsic Investors unit, is to be sentenced next month in what the government called the biggest insider trading scheme in U.S. history, at least by dollar value. He was convicted in February for helping S.A.C. Capital make $276 million on illegal tips about an Alzheimer's drug by trading in Elan Corp. and Wyeth LLC.