Friday, May 16
NEW YORK (AP) — A portfolio manager for one of the nation's largest hedge funds was sentenced on Friday to 3 1/2 years in prison for his insider trading conviction, though a judge cited his overall good character as he showed him leniency.
U.S. District Judge Richard J. Sullivan in Manhattan described Michael Steinberg as generous and thoughtful but said he must go to prison for serious "crimes that go to the heart of what it is to live in an honest society."
Steinberg, 42, was convicted in December of five conspiracy and securities fraud charges related to trades made on two technology stocks, Dell Inc. and Nvidia Corp., between 2007 and 2009. The government said those trades produced illegal profits of at least $1.8 million, which the judge said was "a lot of money to most people." The judge also fined Steinberg $2 million and ordered forfeiture of more than $365,000.
The judge said the "illegal procurement of those gains is something that has to be punished."
The trades were made as Steinberg worked at Stamford, Connecticut-based SAC Capital Advisors. The company, owned by billionaire businessman Steven A. Cohen, last year agreed to pay a record $1.8 billion to settle civil and criminal insider trading charges. Cohen has not been charged criminally but faces civil claims.
Steinberg, who fainted as the jury came out to announce its verdict in December, showed no emotion as the sentence was announced.
Offered a chance to speak before the announcement of the sentence, Steinberg, of Manhattan, declined on the advice of his attorney, Barry Berke, because an appeal is pending before the 2nd U.S. Circuit Court of Appeals.
During oral arguments before the appeals court last month, Circuit Judge Barrington Parker questioned lawyers in a related case about Sullivan's decision not to tell jurors that defendants in insider trading cases must know that an insider giving secrets is receiving a personal benefit from the disclosure for him or her to be found guilty. He noted that at least five other trial judges had given the instruction to jurors in other trials.
And Parker called Sullivan the government's "preferred venue," suggesting that prosecutors steered cases toward Sullivan because he ruled differently than other judges on a key issue of law, an accusation prosecutors vehemently denied.
In a written ruling filed late Thursday, Sullivan declined to toss out the jury verdict against Steinberg and defended his jury instructions, saying the way he instructed the jury was supported by rulings the 2nd Circuit has made over the past two decades, including a decision written by Sonia Sotomayor, who now sits on the U.S. Supreme Court.