Ex-analyst at unit of Cohen's SAC Capital admits insider trading

Fri Sep 28, 2012 2:52pm EDT

* Prominent hedge fund's ex-employee to cooperate in probe

* Analyst is one of three charged in $62 mln case

* SAC "disappointed and angered" by breach of law

By Grant McCool

NEW YORK, Sept 28 (Reuters) - A former analyst at a division of SAC Capital, the hedge fund founded by Steven Cohen, on Friday pleaded guilty to charges of insider trading and agreed to cooperate with U.S. prosecutors in an investigation of what they say was a $62 million scheme.

Technology sector analyst Jon Horvath, at a plea proceeding in federal court in Manhattan, said he obtained non-public information on earnings of Dell Inc in August 2008 and Nvidia Corp in May 2009 that he then shared with his manager.

Horvath, who worked at Sigma Capital in New York, a unit of SAC Capital, from 2006 to 2011, did not identify the manager by name.

Horvath, 42, told U.S. District Judge Richard Sullivan that he obtained Dell and Nvidia secrets from employees of the companies before public announcements of their earnings.

"In each instance I gave the information to the portfolio manager I worked for and we executed trades based on that information," Horvath said.

The case against Horvath and several others was announced in January, part of federal prosecutors' biggest crackdown on Wall Street insider trading in a generation. Scores of traders, hedge fund managers, lawyers and consultants have been convicted in the past four years.

Reuters reported in January that Horvath's supervisor was Michael Steinberg, a long-time top trader with the hedge fund. Steinberg has not been charged and he has not been identified in court papers in the case..

Steinberg's lawyer, Barry Berke, declined to comment.

A spokesman for SAC Capital said in a statement that until Horvath's guilty plea, "we gave him the benefit of the presumption of innocence."

It said the firm is "disappointed and angered" that he broke the law and SAC's policies forbidding insider trading.

SAC, with $14 billion in assets under management, is known for delivering double-digit returns over decades. Neither Cohen nor the fund have been accused of any wrong-doing.

Horvath pleaded guilty to one charge of conspiracy and two charges of securities fraud. As part of the plea, he signed a cooperation agreement that requires him to provide "truthful information and assistance" to the government, Sullivan said.

The charges carry a maximum possible sentence of 25 years. Sullivan scheduled a tentative sentencing date of March 31.

Horvath's lawyer, Steven Peikin, declined to comment after Friday's plea proceeding.

Horvath had previously pleaded not guilty to the charges and had been scheduled to go on trial on Oct. 29. Two former hedge fund portfolio managers charged in the same case have pleaded not guilty and are awaiting trial.

The case is US v. Todd Newman et al, U.S. District Court for the Southern District of New York, No. 12-00121.

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