NEW YORK (Reuters) - “Wall-to-wall” media coverage is hindering SAC Capital executive Michael Steinberg’s chances at a fair trial as it mostly presumes his guilt on insider trading charges, Steinberg’s lawyer claimed in a memo filed on Tuesday.
To fix the problem, Steinberg’s legal team asked for permission to have potential jurors fill out a questionnaire to identify any potential bias among them, according to the memo filed in federal court in New York. At least one legal expert said there was a only slim chance the request would be granted.
The memo said stories about the investigation into Steinberg’s trading in two technology stocks were likely fueled by government leaks, and that potential jurors could be swayed by what they have already read about the case in the press.
“The coverage has not only been ubiquitous, but its qualitative content has also been inflammatory, thereby heightening the risk that it could interfere with the ability of potential jurors to assess impartially the government’s case against Mr. Steinberg and Mr. Steinberg’s defense,” the memo said.
Steinberg is the latest of nine people from Steven A. Cohen’s $15 billion hedge fund SAC Capital Advisors to be charged or implicated by federal prosecutors in an insider trading investigation that has lasted more than five years and resulted in intense media coverage of Cohen and his associates.
He was arrested on March 29 and charged with trading shares of the tech companies Dell DELL.O and Nvidia (NVDA.O) in 2008 and 2009 based on inside information. His trial is set to begin on November 18.
In Tuesday’s memo, Steinberg’s lawyer Barry Berke cited a litany of stories about the insider trading probe of SAC Capital. “The press itself has characterized the coverage of Mr. Cohen, SAC and those associated with SAC as ‘a crescendo,’” he wrote, citing stories in The New York Times, the Wall Street Journal, Reuters, the Associated Press, Bloomberg News, Time, Vanity Fair, the New York Business Journal, New York Magazine and other publications.
“Since September of 2012, for example, Mr. Steinberg has been mentioned in at least 203 original articles, appearing both in print and online, and alleged insider trading at SAC Capital has been mentioned in at least 931 original articles,” Berke wrote.
His memo also listed the number of times the Steinberg case and SAC Capital’s insider trading woes were discussed on TV, and the number of times the subjects were mentioned - more than four thousand - on the social media site Twitter.
“Certainly the matters that get this kind of attention are newsworthy and people want to read about them and want to be informed,” said Stephen Crimmins, a partner at K&L Gates in Washington who is not associated with the Steinberg case.
Crimmins said the request for extra flexibility to question jurors was one of several avenues defense lawyers have to try to stamp out bias on a jury. In more extreme cases, he said, they can ask that the trial be moved to a different part of the country, where media attention has not been so heavy.
Evan Stewart, a partner at Zuckerman Spaeder in New York, who also has no connection to the case said even the modest request for a juror questionnaire might not be granted, in part because some of the latest stories about the insider trading probe of SAC have posited that Cohen might not be criminally charged after all. In addition, Stewart said, lawyers for other high-profile people tried recently in New York for insider trading, including former McKinsey & Co. CEO Rajat Gupta, did not raise press coverage as an issue, despite intense media attention in those cases.
In Tuesday’s memo, Berke argued the focus on emails admitted into court records in the case against another portfolio manager who worked at SAC is hurting Steinberg. The emails show former SAC portfolio manager Jon Horvath discussing information about Dell that was allegedly not public. Steinberg is included in the email chain and warns another recipient to “please be discreet.”
Horvath pleaded guilty last year to insider trading charges and is cooperating with U.S. prosecutors. Legal experts say the government will have to use testimony from Horvath in its case against Steinberg.
Berke said information in the articles sourced to “a person familiar with the investigation” seemed to come from the government, either the Federal Bureau of Investigation, which has been conducting the investigation, or U.S. prosecutors in New York. He bemoaned the appearance of a Wall Street Journal reporter with a camera at dawn at Steinberg’s apartment to film his arrest.
Peter Donald, a spokesman for the FBI, declined to comment, as did Jennifer Queliz, a spokeswoman for Manhattan U.S. Attorney Preet Bharara.
The case is U.S. v. Steinberg, U.S. District Court, Southern District of New York: United States v. Steinberg, No. 12-cr-121, and Securities and Exchange Commission v. Steinberg, No. 13-2082.
Reporting By Emily Flitter and Jonathan Stempel; Editing by Alden Bentley and Andrew Hay