"Mr. Steinberg was at the center of an elite criminal club, where cheating and corruption were rewarded," he said. "Research was nothing more than well-timed tips from an extensive network of well-sourced analysts."
At least four other people associated with the Stamford, Conn.-based firm have been arrested over a period of about four years.
The arrest of Steinberg and the January arrest of a former hedge fund portfolio manager for an affiliate of Cohen's firm have increased speculation that the government is taking a hard look at the practices of the wealthy hedge fund owner.
In the January case, Cohen is repeatedly referenced in court papers as a "Hedge Fund Owner." He has not been charged, and SAC spokesman Jonathan Gasthalter has said the company and Cohen are cooperating with the inquiry and "are confident that they have acted appropriately."
On Friday, Steinberg was charged with conspiracy to commit securities fraud and four counts of securities fraud, accused of using inside information as he made trades involving
securities. If convicted, he could face up to 85 years in prison.
Prosecutors said he made more than $1.4 million illegally in connection with trades involving Dell and Nvidia in 2008 and 2009. In a civil case filed Friday by the Securities and Exchange Commission, the agency said Steinberg's trades resulted in more than $6 million in illegal profits or avoided losses for the company.
"Steinberg essentially got an advance copy of Dell and Nvidia's quarterly earnings announcements, allowing him to trade on tomorrow's news today," said George S. Canellos, acting director of the SEC's Division of Enforcement.
The SEC said Steinberg used inside information to trade securities of Dell and Nvidia in advance of at least four quarterly earnings announcements by the companies.
Writer Tom Hays contributed to this report.