Federal authorities arrested a former portfolio manager at SAC Capital Advisors Friday on charges of fraud, the latest in a string of similar insider-trading indictments against former employees of the hedge fund founded and owned by University trustee Steven Cohen P’08 P’16.
The allegations against Michael Steinberg, who was later released on $3 million bail, constitute the highest-level indictment yet from government investigators, who have charged eight other SAC employees with connections to insider trading in the past four years. Four have pleaded guilty.
Steinberg is the most senior employee indicted in the government’s probe. He joined the company when it had only a few dozen traders, and he is close to Cohen, multiple news outlets reported. Steinberg recently went on leave from the hedge fund.
Unlike past allegations against other former employees, SAC responded to the news with a statement affirming its support for Steinberg.
Steinberg has pleaded not guilty, and his lawyer said he “did absolutely nothing wrong” in a statement.
Steinberg is accused of using advance information about Dell, Inc., and Nvidia Corp. to siphon more than $6 million in profits or averted losses for SAC in 2008 and 2009.
The scheme was first made public in January 2012, when former SAC technology analyst Jon Horvath was arrested. Horvath implicated Steinberg last fall as part of his guilty plea, the New York Times reported.
Steinberg also faces a civil suit from the Securities and Exchange Commission.
A judge also raised doubts last week about a separate settlement SAC reached earlier this month with the SEC. U.S. District Court Judge Victor Marrero declined Thursday to immediately approve a $602 million settlement that the fund agreed to pay related to insider-trading charges, raising questions about a provision that allowed SAC to settle without admitting any wrongdoing.
Due to its legal troubles, SAC lost about $1.7 billion from investors as of a February deadline the hedge fund set for investment withdrawal.
National media outlets have widely portrayed the federal government as attempting — unsuccessfully — to mount insider-trading charges against Cohen personally, with major publications reporting that authorities were stymied by a lack of direct links between Cohen and any of the alleged illicit schemes.
University officials said there were no plans to reevaluate Cohen’s place in the Corporation, which he has held since May 2008, as a result of the charges against SAC and its employees.
“Steve Cohen is a valued and involved trustee of Brown, and the University has been strengthened by his engagement,” said Chancellor Thomas Tisch ’76 in a statement released to The Herald. “There has been no pressure on (Cohen) — or the Corporation — for him to leave his seat.”