Jurors will get their first glimpse Wednesday afternoon at the
criminal case against veteran hedge-fund portfolio manager Michael
Steinberg, the most senior SAC Capital Advisors LP employee to face
insider-trading charges.
Opening statements by federal prosecutors and Mr. Steinberg's
lawyers were expected to begin after U.S. District Judge Richard
Sullivan said a 12-member jury was selected, along with four
alternate members.
The media scrutiny of the government's insider-trading
crackdown, including the investigation into hedge-fund giant SAC,
complicated the effort over the last day and a half to find a jury
through private interviews with potential candidates in Manhattan
federal court.
About 100 people, a larger than a normal jury pool, were
assembled amid concerns about the publicity, and multiple
prospective jurors conceded they had read about the SAC probe and
that it could skew their view of the case against Mr. Steinberg.
Those expressing such views were cut from the jury pool.
The trial, expected to last four weeks, could offer one of the
fullest looks yet into the inner workings of the hedge-fund giant,
but may also present a challenge to the nearly unblemished
insider-trading case record of the Manhattan U.S. Attorney's
Office.
Prosecutors were expected to give their opening statements
Wednesday afternoon about their allegations that Mr. Steinberg made
illegal trades in 2008 and 2009 in shares of technology companies
Dell Inc. and Nvidia Corp.
Lawyers for Mr. Steinberg, who are also expected to give their
opening remarks, say he is innocent and that he wasn't aware that
any information he received had been obtained improperly.
Mr. Steinberg's case presents prosecutors with a challenge. They
will have to show not just that he possessed inside information
about Dell and Nvidia, but that Mr. Steinberg knew it had been
obtained illegally, even though it had reached him only after being
passed along a chain of analysts and traders.
His tipper is alleged to have been Jon Horvath, a former SAC
analyst who earlier pleaded guilty to insider-trading charges and
is expected to be a star witness for the government.
Prosecutors in the Southern District of New York are in the
midst of an unprecedented insider-trading crackdown, securing more
than 70 guilty pleas or convictions in insider-trading cases over
the past four years. They simultaneously built their case against
SAC, charging eight traders at the firm, six of whom have pleaded
guilty. Earlier this month, SAC struck a pact to resolve criminal
insider-trading charges with federal prosecutors, accepting
responsibility for insider trading by six of its employees and
agreeing to pay about $1.2 billion in new penalties.
Mr. Steinberg, who is on leave from SAC and whose legal fees are
being paid by the firm, was a close associate of SAC founder Steven
A. Cohen's and often screened trades for him, according to people
familiar with the matter.
Mr. Cohen, who doesn't face criminal charges, faces a civil case
filed by the Securities and Exchange Commission, which alleges the
hedge-fund boss failed to adequately supervise traders, including
Mr. Steinberg. An SAC spokesman has said previously that Mr. Cohen
denies wrongdoing and acted appropriately at all times.
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