SAC's Steinberg wanted 'edgy' information, ex-analyst says

Wed Nov 27, 2013 4:49pm EST
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By Nate Raymond

NEW YORK (Reuters) - A former analyst testified on Wednesday that SAC Capital Advisors portfolio manager Michael Steinberg pushed him to obtain "edgy" information about technology companies after he had made money-losing recommendations.

Jon Horvath, the former analyst, gave the account in federal court in New York, where he is testifying against Steinberg, the first employee of Steven A. Cohen's SAC Capital to face trial in a government's investigation of insider trading on Wall Street.

Horvath, who has pleaded guilty and is cooperating with prosecutors, told jurors that after a bad bet in 2007 Steinberg encouraged him to cultivate sources with information on public companies. Horvath said he thought Steinberg meant non-public information.

"What I need you to do is get edgy, proprietary, market-moving information so we can use it to make money on these stocks," Horvath said Steinberg told him.

Steinberg is the first SAC employee charged in the government's long-running insider trading investigation to face trial. SAC earlier this month pleaded guilty to fraud charges and agreed to pay $1.2 billion.

Steinberg, 41, faces five counts of securities fraud and conspiracy to commit securities fraud on allegations he used inside information to trade shares of Dell Inc and Nvidia Corp in 2008 and 2009, resulting in $1.4 million in profits. He denies wrongdoing.

Prosecutors have said Steinberg obtained his information from a "corrupt circle" of Wall Street analysts who swapped tips and fed them to their hedge fund bosses for trading purposes.

Those analysts included Horvath, 44, who prosecutors said was the key link between the group and Steinberg.   Continued...

Michael Steinberg (R) arrives at the Manhattan Federal Courthouse in New York, November 19, 2013. REUTERS/Brendan McDermid