The criminal insider-trading probe of hedge-fund giant SAC Capital Advisors is getting awfully close to billionaire founder Steve Cohen.
Michael Steinberg, one of Cohen’s top lieutenants, has been indicted by a federal grand jury on four counts of securities fraud and one count of conspiring to commit securities fraud — allowing him to pocket $1.4 million in profits.
Each securities fraud count carries a maximum prison term of 20 years.
Steinberg, 40, the highest-ranking executive at Cohen’s $14 billion SAC to be caught in US Attorney Preet Bharara’s insider-trading probe, was cuffed by FBI agents at his posh Park Avenue apartment today and brought before a judge.
Cohen and Steinberg have worked together for years and are friends. Cohen, a billionaire art collector, attended Steinberg’s wedding at the Plaza Hotel 14 years ago, a source told The Post.
Steinberg pleaded not guilty before Manhattan federal judge Richard Sullivan, where he appeared shortly before noon wearing a blue sweater and dark slacks.
“Not guilty, your honor,” he said. He was released on $3 million bail.
The feds have accused the Great Neck, NY, native of participating in an insider-trading conspiracy that has already led to the convictions of at least half a dozen other hedgies, including Anthony Chiasson, co-founder of Level Global.
Prosecutors said Steinberg received illegal tips on Dell and Nvidia, including a heads-up on quarterly financial results.
Steinberg got the Dell tips from his analyst Jon Horvath, who received it from Jesse Tortora at Diamondback Capital, who got the info from analyst Sandy Goyal at Neuberger Berman — who was tipped off by unidentified Dell employees, according to the indictment.
Horvath, Tortora and Goyal have all pleaded guilty and are cooperating with prosecutors.
Cohen has not been charged with any crime, although it has been reported that he is the subject of the FBI probe and that agents may seek to pressure Steinberg to turn on Cohen, who has said neither he nor SAC has done anything wrong.
SAC stood by Steinberg yesterday, saying in a statement: “Mike has conducted himself professionally and ethically during his long tenure at the firm. We believe him to be a man of integrity.”
Steinberg has been on leave from SAC since Horvath pleaded guilty in September.
“Michael Steinberg has done absolutely nothing wrong,” his lawyer, Barry Berke, said.
“At all times, his trading decisions were based on detailed analysis as well as information that he understood had been properly obtained,” he added.
As previously reported by The Post, Steinberg was worried about the embarrassment of being arrested in front of his family and his lawyer asked permission to let Steinberg self- surrender. The request was denied.
To avoid having his kids see him cuffed at home, Steinberg spent nights at a hotel as word spread of his impending arrest.
Last week, he and his family left for a Florida vacation, sources said. Steinberg’s lawyer then negotiated with the feds for him to return to New York — by himself — to be arrested at home alone, thus avoiding the humiliation and shame of being cuffed in front of his family.