| NEW YORK
NEW YORK May 15 A U.S. judge on Thursday
rejected a request to acquit Michael Steinberg, a day before the
scheduled sentencing on an insider trading conviction for the
former portfolio manager at Steven A. Cohen's SAC Capital
Advisors hedge fund.
U.S. District Judge Richard Sullivan in Manhattan rejected
various arguments by Steinberg's lawyers, including that a jury
could not have rationally found he knew corporate insiders were
receiving benefits to provide illegal tips.
"On the facts presented at trial, a rational jury could find
that (Steinberg) knew or was willfully blind to the fact that
the tippers breached duties of trust and confidence by
disclosing material nonpublic information for their personal
benefits," Sullivan wrote.
Barry Berke, a lawyer for Steinberg, declined comment.
A hearing is set on Friday to sentence Steinberg.
Prosecutors say he should serve up to 6-1/2 years of prison for
trading on inside information.
Prosecutors accused Steinberg, 42, of trading on illegal
tips about Dell Inc and Nvidia Corp passed to
him by an SAC analyst, who admitted to swapping confidential
information among a group of analysts at other hedge funds.
A jury convicted Steinberg in December on charges conspiracy
and securities fraud, adding him to what has become a list of
eight current or former SAC Capital employees convicted on
insider trading charges.
SAC Capital itself has pleaded guilty to fraud charges and
has agreed to pay $1.8 billion in criminal and civil
SAC Capital recently rebranded itself Point72 Asset
Management as it shifted toward being a so-called family office
managing mostly Cohen's own fortune.
In his 10-page decision, Sullivan reaffirmed his view that
to gain an insider trading conviction, the government did not
need to prove that the recipient of non-public information must
know that the source of the tip benefited from the disclosure.
The issue is expected to part of Steinberg's appeal. It is
already under review by the 2nd U.S. Circuit Court of Appeals in
the related insider trading case of two other convicted fund
managers, Todd Newman, a former portfolio manager at Diamondback
Capital Management, and Anthony Chiasson, co-founder of Level
During arguments before the 2nd Circuit last month in Newman
and Chiasson's case, two of the three judges on the panel voiced
skeptical questions regarding whether Sullivan's interpretation
But Sullivan on Thursday called a requirement that the
government prove knowledge of a personal benefit "a redundant
and unnecessary element."
He added that a rational jury could have found that
Steinberg "knew or at least overwhelmingly suspected" the
tippers received a benefit.
Evidence showed Steinberg was "savvy enough to understand
that there is no such thing as a free lunch," Sullivan wrote.
The case is U.S. v. Steinberg, U.S. District Court, Southern
District of New York, No. 12-cr-00121.
(Reporting by Nate Raymond in New York; Editing by David