The government’s key witness against alleged inside trader Michael Steinberg is a liar, a lawyer for the SAC Capital Advisors executive said Thursday.
“We think [Jon Horvath] is a witness who will say things either he knows [are] false or says whatever he thinks the government wants to hear,” Steinberg’s lawyer, Barry Berke, in a contentious showdown with prosecutor Antonia Apps, told Judge Richard Sullivan.
In an exchange outside earshot of the jury, Berke claimed Horvath, a former SAC research analyst, lied to prosecutors to cut a deal.
Horvath, who confessed to being part of a corrupt circle of inside traders on Wall Street, is the government’s main witness against his former boss Steinberg, a portfolio manager at SAC.
Horvath, in his third day of cross-examination, continued to be tripped up on one statement after another.
Berke wanted to introduce new evidence that Horvath told the FBI in September of 2012 that Steinberg had convinced Gabe Plotkin, an SAC portfolio manager, to change his positions in Dell from long to short in August of 2008. The statement was made days before Horvath reached a cooperation deal with prosecutors.
In earlier testimony, Horvath said he received inside information he relayed to Steinberg, causing the portfolio manager to make a $10 million short on Dell. The trade is the center of the case against Steinberg.
The position was controversial inside SAC, as both Plotkin and SAC founder Steve Cohen were long.
Plotkin only reduced his $40 million position marginally, Berke said. But Apps pointed out that Cohen “did entirely close his position. Do we have to introduce that?”
Sullivan allowed Berke to ask Horvath if he had made the statement to the FBI about Steinberg convincing Plotkin to go short.
“I don’t recall,” said Horvath in response, adding, “I recall saying Steve closed…” and then the judge cut him off before he could finish the statement that Cohen had sold his Dell stake.
Cross examination of Horvath continues Monday.
Steinberg, the highest-ranking SAC employee caught in US Attorney Preet Bharara’s insider-trading probe, faces up to 20 years in prison if convicted.