The insider-trading conviction of Michael Steinberg — SAC Capital founder Steve Cohen’s right-hand man — was perhaps the sweetest victory yet for US Attorney Preet Bharara.
Bharara has been circling Cohen and SAC for years, persuading six former SAC employees to plead guilty and wresting a plea from the firm.
But Steinberg’s was the first SAC case to go to trial, and the jury conviction could help the government as it moves forward.
First, Steinberg’s conviction could put pressure on another SAC money manager, Mathew Martoma, who has so far declined to cooperate with the government.
The feds claim Martoma placed a 20-minute call to Cohen after receiving inside information that resulted in a $276 million profit at SAC.
Martoma’s case goes to trial in less than three weeks, and the facts are widely believed to be more straightforward than the confusing circumstances surrounding Steinberg’s crimes.
Unlike Martoma, who is alleged to have received illicit information from a doctor with knowledge of drug trials, Steinberg had five degrees of separation from the source of the illegal information he was convicted on.
“The verdict just shows that the US Attorney’s office wins these cases,” said Stuart Slotnick, a white-collar defense lawyer.
Steinberg’s conviction is also expected to aid the Securities and Exchange Commission in its attempt to ban Cohen from the industry for life for failure to supervise.
Finally, Bharara is believed to have an active criminal probe of Cohen, who has not been charged with any crimes and steadfastly maintains he broke no laws.