By Larry Neumeister, Associated Press
NEW YORK -- A senior portfolio manager for one of the nation's largest hedge funds was arrested Friday, accused of joining an insider trading conspiracy that the government said made more than $6 million illegally for the powerhouse investment company founded by billionaire businessman Steven A. Cohen.
The arrest broadens the government's probe of trading practices at SAC Capital Advisors, which manages $15 billion.
Two weeks ago, the Securities and Exchange Commission said that two affiliates of SAC Capital would pay more than $614 million in what federal regulators called the largest insider trading settlement ever. The settlement is subject to court approval.In the latest development, Michael Steinberg, 41, pleaded not guilty Friday to insider trading charges only hours after being arrested at his Manhattan apartment. The charges were lodged in an indictment unsealed in U.S. District Court in New York City. Steinberg, who has worked more than 15 years at SAC Capital Advisors and its Sigma Capital Management unit, was released on $3 million bail. Assistant U.S. Attorney Antonia Apps told Judge Richard Sullivan that Steinberg made no statements to authorities after his arrest. Steinberg's attorney, Barry Berke, said in a statement that his client "did absolutely nothing wrong." He said Steinberg's trading decisions were based on detailed analysis along with other information he properly obtained. "Caught in the crossfire of aggressive investigations of others, there is no basis for even the slightest blemish on his spotless reputation," he said. In a statement, SAC Capital said Steinberg "has conducted himself professionally and ethically during his long tenure at the firm. We believe him to be a man of integrity." U.S. Attorney Preet Bharara said in a statement that Steinberg "was another Wall Street insider who fed off a corrupt grapevine of proprietary and confidential information cultivated by other professionals who made their own rules to make money. With lightning speed in at least one case, Mr. Steinberg seized on the opportunity to cash in and tried to keep his crime quiet, as charged in the indictment." George Venizelos, head of the FBI's New York office, said the arrest was the latest in an FBI probe that has resulted in more than 70 arrests.