Prosecutors want to introduce SAC Capital founder Steve Cohen’s trades into the insider-trading trial of his top lieutenant — and the judge on Tuesday said he may let them do it.
Assistant US Attorney Antonia Apps said she needed to tell the jury about Cohen’s trades in tech giant Dell to refute an argument by the lawyer for defendant Michael Steinberg that the government’s key witness turned on Steinberg, his former boss, because all of his buddies had already been charged.
“There are other potential targets that [key witness Jon Horvath] talked to the government about,” Apps said in a talk with Judge Richard Sullivan and defense lawyer Barry Berke away from the jury.
When the deal was cut, the feds were also investigating Cohen and SAC Capital.
Cohen has not been charged, but his firm recently pleaded guilty to five counts of securities and wire fraud and agreed to pay a record fine of $1.8 billion.
The defense has fought to keep Cohen’s Dell trades away from the jury.
“It seems fair game to ask what are the other targets besides Michael Steinberg,” said Sullivan. “The cross [examination of Horvath] did open the door.”
Sullivan said he would rule on the matter Wednesday morning.
Steinberg is the most senior SAC executives caught in the feds’ wide-ranging insider-trading probe and faces up to 20 years in prison if convicted.
Also on Tuesday, Berke finished five days of cross-examination of Horvath.
Horvath, who had become more confident by the end of his five days of cross, started to come alive under the re-direct examination of Apps.
“Mike knew I shared lot of the information” received from the corrupt circle of friends, he said, looking directly at the jury and often gesticulating with his hands to make points.
Apps — who traded in the black suit she wore during the first 10 days of trial for a wheat-colored one that matched her shoulder-length hair — finally turned her attention to what appeared to have been one of the most damning points in the cross-examination of Horvath.
That is the notion that the term “edge” was innocuous and not code for insider trading at SAC.
“My edge is contacts at the company,” Horvath had written in an Oct. 30, 2007, note to his bosses Steinberg and Andrew Lester, referring to Dell, whose trades are at the center of the insider trading case.
Steinberg quickly wrote back “I suspect the line about contacts may wake up some of our legal eagles.” SAC executive Andrew Lester responded that it “might precipitate a general inquiry to confirm we are not in possession of non-public information.”
But Horvath said no one at SAC ever asked him if he that meant he had non-public information, which would have been illegal to trade on.