SAC portfolio manager arrested

The arrest of Michael Steinberg had been expected.
The arrest of Michael Steinberg had been expected.

NEW YORK — An SAC Capital Advisors portfolio manager was arrested by federal agents Friday, becoming the most senior employee at the hedge fund ensnared in the government’s vast insider trading investigation.

Michael Steinberg, 40, was arrested at his Park Avenue apartment early Friday morning and taken out of his building in handcuffs. He has worked for SAC and its owner, the billionaire investor Steven A. Cohen, since 1997 and became one of the firm’s senior portfolio managers, focusing on technology stocks.

Steinberg entered a plea of not guilty in US District Court in Manhattan on Friday and was freed on $3 million bail.


‘‘Michael Steinberg did absolutely nothing wrong,’’ said Barry H. Berke, a lawyer for Steinberg. ‘‘Caught in the crossfire of aggressive investigations of others, there is no basis for even the slightest blemish on his spotless reputation. Steinberg is thankful for all the people who have continued to stand by him and believe in his innocence.’’

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Steinberg had returned Thursday from Florida, where he had been vacationing with his family. He was the only one in the apartment Friday morning, as his wife and children stayed in Florida.

Though recently placed on leave, Steinberg is one of SAC’s longest-tenured employees. He joined SAC shortly after graduating from the University of Wisconsin, when the fund was just Cohen and several dozen traders. For years, he sat near Cohen on the trading floor and the two grew close.

When Steinberg was married in 1999 at the Plaza Hotel, Cohen attended the black-tie affair. The two share the same hometown, Great Neck, N.Y., on Long Island, where they both attended Great Neck North High School.

A spokesman for SAC said Friday: ‘‘Mike has conducted himself professionally and ethically during his long tenure at the firm. We believe him to be a man of integrity.’’


Steinberg’s arrest had widely been expected, and is the latest in a swirl of activity surrounding the government’s investigation of SAC. Earlier this month, Cohen signed off on two settlements in which the firm agreed to pay federal securities regulators $616 million to resolve two insider trading cases against SAC. On Thursday morning, a federal judge refused to approve the larger of the two settlements, a $602 million pact, raising concerns over a provision that allows SAC to avoid admitting that it did anything wrong.

The smaller of the settlements, for about $14 million, related to trading by Steinberg and a fellow portfolio manager, Gabe Plotkin, according to people familiar with the case. Plotkin has not been charged with any wrongdoing.

Steinberg’s name first surfaced in the broader inquiry last September when a former SAC analyst who worked under him pleaded guilty to being part of an insider trading ring that illegally traded the technology stocks of Dell Inc. and Nvidia.

As part of his guilty plea, the analyst, Jon Horvath, implicated Steinberg, saying that he gave the confidential information to his SAC boss and that they traded based on the secret financial data about those two companies.