Prosecutors yesterday confirmed the worst-kept secret in the insider-trading trial unfolding in Manhattan federal court: They view former SAC Capital money manager Michael Steinberg as a co-conspirator in the case.
Prosecutor Antonia Apps argued yesterday that Steinberg, a portfolio manager with SAC’s Sigma Alpha unit, should be officially labeled a co-conspirator in the case because he knew his former analyst, John Horvath, was receiving illegal tips on computer-maker Dell.
The government has already alluded to Steinberg’s alleged role in earlier court documents, when it referred to four unnamed co-conspirators, including “the portfolio manager to whom Jon Horvath reported at his hedge fund.” That person is Steinberg.
Stephen Fishbein, defense lawyer for former Diamondback portfolio manager Todd Newman, objected, saying there’s no evidence that Steinberg knew Horvath was passing on confidential tips.
Judge Richard Sullivan said he will decide on the issue at a hearing today in the trial of Level Global co-founder Anthony Chiasson and ex-Diamondback Capital Management portfolio manager Todd Newman.
Horvath has pleaded guilty to insider-trading charges.
Sullivan will also hear arguments on whether Level Global co-founder David Ganek can be labeled a co-conspirator in the case.
Neither Steinberg nor Ganek have been charged in the case, but the government is seeking to have them named co-conspirators in part to admit some of their communications as evidence against Chiasson and Newman.
The government has accused the two of profiting from tips on Dell and Nvidia that they received from their former analysts. Chiasson and Newman have argued that they were never told the tips were coming from corporate insiders.
Steinberg’s lawyer, Barry Berke, declined to comment. Ganek’s lawyer, John Carroll, strenuously rejected the government’s characterization of his client and said the prosecution’s evidence is flawed.
Chiasson and Newman are expected to launch their defense on Monday, when the government is slated to rest its case.