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Five SAC Traders Implicated In Insider Trading Case

Tyler Durden's picture




 

Two years ago nobody would dare touch Steve "Blue Eyes" Cohen's firm. Then we dared to ask some questions. Then the entire expert "information arbitrage" network pyramid got exposed (with a one year delay after ZH) and hedge funds returns aka "alpha" plunged. And now this. From Bloomberg:

  • FIVE SAC CAPITAL EMPLOYEES HAVE BEEN IMPLICATED IN INSIDER CASE
  • SAC MANAGER SAID TO BE UNCHARGED FIGURE IN HEDGE FUND SCHEME
  • SAC FUND MANAGER MICHAEL STEINBERG SAID TO BE TIED TO PROBE
  • SAC CAPITAL'S STEINBERG SAID TO BE UNINDICTED CO-CONSPIRATOR

How long until we go from unindicted, i.e. extensively questioned, to indicted? Or rather, just which bigger fish are these "unindicted co-conspirators" expected to throw under the bus? And what happens to the NYSE if/and or when the firm that trades 10% of its daily volume is busted?

From Bloomberg:

A hedge fund manager at Steven Cohen’s SAC Capital Advisors LP is an unindicted co-conspirator in a $62 million insider trading scheme tied to technology stocks, two people familiar with the matter said.

 

The role allegedly played by Michael Steinberg emerged in court papers filed by the U.S. in the securities-fraud case of Jon Horvath, a former technology analyst at Cohen’s $14 billion hedge fund who Steinberg supervised. Steinberg, who hasn’t been charged with a crime, is the fifth person to be tied to insider trading while employed at SAC.

 

Horvath faces trial Oct. 29 in Manhattan federal court along with two other portfolio managers for his part in what Manhattan U.S. Attorney Preet Bharara called a “criminal club:” a conspiracy of hedge fund managers, co-workers and company insiders who reaped millions of dollars on illegal tips about Dell Inc. and Nvidia Corp.

 

“The government added four additional co-conspirators,”

 

prosecutors wrote in a Sept. 6 letter filed with the court, with the names blacked out. One of them, the U.S. said, is “the portfolio manager to whom Jon Horvath reported at his hedge fund.” That person was Steinberg, said the people, who declined to be identified because the matter isn’t public.

 

Steinberg, 40, of SAC’s Sigma Capital Management unit, has worked at the hedge fund since 1997. He and his lawyer, Barry Berke, didn’t return calls or e-mails seeking comment on the letter.

 

Jonathan Gasthalter, a spokesman for Stamford, Connecticut- based SAC, and Ellen Davis, a spokeswoman for Bharara, declined to comment on the court filing.

 

Level Global

 

Horvath, and his co-defendants, Level Global Investors LP co-founder Anthony Chiasson and ex-Diamondback Capital Management LLC portfolio manager Todd Newman, are accused of participating in a conspiracy with other portfolio managers, analysts and insiders at technology firms who swapped tips between 2007 and 2009.

 

The three men were first charged by Bharara’s office in January. Five people who were part of the alleged insider- trading ring have pleaded guilty and are cooperating with the government.

 

The government filed a revised indictment against Horvath, Chiasson and Newman on Aug. 28, adding an additional securities fraud count against all three men for alleged insider-trading involving Santa Clara, California-based Nvidia.

 

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Tue, 09/25/2012 - 17:00 | 2829596 ThisIsBob
ThisIsBob's picture

What happens to the NYSE? It eats shit and dies, that's what.

Tue, 09/25/2012 - 17:01 | 2829623 Lohn Jocke
Lohn Jocke's picture

Long bail bonds?

Tue, 09/25/2012 - 17:22 | 2829710 TruthInSunshine
TruthInSunshine's picture

I will predict here and now that Steve Cohen will be Obama's October "[s]ee, I told you I would crack down on Wall Street..." show pony.

Hurry, Eric Placeholder....connect those dots, flip the smaller fish, convene that grand jury & rush that criminal information to the federal courthouse on time!

Did SAC think it could merely pay a 550 million dollar fine (representing 2.1% of criminally ill-gotten gains) like Goldman 'Doing God's Work' Sachs, similar percentage fines by JP Morgan (headed by the very connected Jamie "Diamond" Dimon) or any of the other dynasties that literally own Congress & The Executive Branch and skate?

Tue, 09/25/2012 - 17:30 | 2829778 Dr Benway
Dr Benway's picture

Don't worry, soon we will be back to 'no admission of guilt' and 'settlements' and 'stern letters' and 'pinky promises'. Regulators do not enforce, they legitimize.

 

Check out my slideshow on an Australian financial crime cartel:

http://s1144.photobucket.com/albums/o489/_DrBenway/

Tue, 09/25/2012 - 17:38 | 2829806 TruthInSunshine
TruthInSunshine's picture

Oh, I never said they're even trying for a conviction. They just want the indictment headline & flashbulb-laden perp walk right around November 1st.

Tue, 09/25/2012 - 17:58 | 2829875 ACP
ACP's picture

What the shit? Someone was arrested for insider trading? What's this world coming to? Before you know it, the SEC will be going after the scum who manipulate the market! Whoa, feels like a stroke...

Nah, ain't gonna happen.

Tue, 09/25/2012 - 18:07 | 2829903 TruthInSunshine
TruthInSunshine's picture

Whisper rumor that Obama's DOJ is about to indict Barton Biggs posthumously.

Wed, 09/26/2012 - 02:24 | 2830988 mr_T
mr_T's picture

Only the legislative branch is allowed to insider trade legally until recently.

Martha and the rest of us NO.

As Gerald C. says justice.... Just us...

Tue, 09/25/2012 - 18:24 | 2829956 laomei
laomei's picture

Long slaps on wrists

Tue, 09/25/2012 - 17:02 | 2829628 Precious
Precious's picture

You didn't write that algo ...

Tue, 09/25/2012 - 19:33 | 2830218 Cash2Riches
Cash2Riches's picture

Five thats it? It should be more like 500.

 

http://davidmorganblog.blogspot.ca/

Tue, 09/25/2012 - 16:59 | 2829598 Robslob
Robslob's picture

I will answer that question:

NOTHING

On the lighter side it looks like today's drop was now apparently due to 5 SAC traitors selling their positions to move on to greener pastures.

Got China?

Tue, 09/25/2012 - 17:01 | 2829606 Rattling Bones
Rattling Bones's picture
  1. Depends if they hire Eric Holder's people to defend them.
Tue, 09/25/2012 - 17:18 | 2829715 ToNYC
ToNYC's picture

The real question is whether Steve Cohen has decided to bundle his lobbying funds with the Jon Corzine Gang.

Tue, 09/25/2012 - 17:00 | 2829610 Larry Dallas
Larry Dallas's picture

Good. Fuck 'em. Statistically they couldn't get these returns without knowing something. The whole brokerage model designed to tell you what you want to know, depending on how much on fees you pay me.

If you don't pay me enough in fees, then go to hell. That's an inappropriate question.

Tue, 09/25/2012 - 17:42 | 2829820 barroter
barroter's picture

Agreed. You're better off not dealing with these sub-humans to begin with. The less contact you have, the better.

Tue, 09/25/2012 - 17:01 | 2829619 Lost Wages
Lost Wages's picture

Kick 'em in the SAC.

Tue, 09/25/2012 - 17:01 | 2829624 JustObserving
JustObserving's picture

Steve Cohen and Michael Steinberg will remain as free as Jon Corzine.  Laws are for little people.

Tue, 09/25/2012 - 17:26 | 2829755 Kastorsky
Kastorsky's picture

do you mean "for gentile people"?

Tue, 09/25/2012 - 17:05 | 2829640 roadsnbridges
roadsnbridges's picture

Only 5?  WTF?

Tue, 09/25/2012 - 17:09 | 2829642 cougar_w
cougar_w's picture

Five underlings is all they need to wrap this up in the publics' perception.

I would reallly hate to be a Wall Street lesser minion right now. There will be a trickle of these public lynchings in the run-up to November elections. Food for the ravenous beasts of public opinion, easily sated with small fry.

After November there will be not a peep more heard on this front. And eventually even these little guys will be back working on Wall Street for their greater Masters. Eric Holder should be cast back into Mount Doom from whence he came.

Wed, 09/26/2012 - 03:27 | 2831031 CompassionateFascist
CompassionateFascist's picture

No, they'll be doing the kosher inside-outside thing. Cf. Nomi Prins, Max Keiser, and etc. 

Tue, 09/25/2012 - 17:05 | 2829645 Venerability
Venerability's picture

This is a WOW!

Would they please investigate Renaissance, too? Maybe they'll stop leaving dead kittens on my doorstep.

Tue, 09/25/2012 - 17:06 | 2829648 Unbezahlbar
Unbezahlbar's picture

Gives new meaning to "The Untouchables."

I am surprised more Hollywood types have not jumped all over rampant Wall Street fraud.

Michael Douglas films are still tops in this regard.

How about, "Fraud Never Takes a Holiday."

Tue, 09/25/2012 - 17:06 | 2829654 roadsnbridges
roadsnbridges's picture

Wasn't LIESman screaming it was a buy today?  Or was he too busy trying to identify States on his map?

Tue, 09/25/2012 - 19:34 | 2830220 azzhatter
azzhatter's picture

Whatever he was talking about, he did appear to have a fresh load of Bennies jizz in his mouth

Tue, 09/25/2012 - 17:09 | 2829668 Robslob
Robslob's picture

As are documentaries that are so full of shit that even Sheeple could love!

Tue, 09/25/2012 - 17:11 | 2829684 GeezerGeek
GeezerGeek's picture

I guess they could only find five who weren't Obama bundlers, and needed to set some examples.

Tue, 09/25/2012 - 17:14 | 2829700 magpie
magpie's picture

...at least no people who were on billboards

Tue, 09/25/2012 - 17:13 | 2829691 tekhneek
tekhneek's picture

SAC = Should'a Asked Corzine

?

Tue, 09/25/2012 - 17:15 | 2829703 Seasmoke
Seasmoke's picture

Cohen and Steinberg ...... Enough said !

Tue, 09/25/2012 - 17:28 | 2829768 LarryDavis
LarryDavis's picture

Anyone in the industry knows whats up with SAC.....ten years ago they were returning close to 100% a year on billons under management. dude is smart but not that smart. read the interview with him in market wizards and tell me if you think he might have had an edge. 

Tue, 09/25/2012 - 18:04 | 2829885 Rainman
Rainman's picture

Hold Bros. is another that earns a wristslap fine for HF spoofing.

 

 http://www.bloomberg.com/news/2012-09-25/sec-says-new-york-broker-allowed-high-speed-stock-manipulation.html

Tue, 09/25/2012 - 17:29 | 2829774 Pancho Villa
Pancho Villa's picture

You mean the SEC actually caught someone? Amazing! They must have accidentally cc'ed the SEC on their emails.

Tue, 09/25/2012 - 17:36 | 2829803 roadsnbridges
roadsnbridges's picture

Think they were all on the same porn channel.  Kinda like those dudes in Libya posting on a poker channel.  (likker in the front.)

Wed, 09/26/2012 - 09:31 | 2831551 RiverRoad
RiverRoad's picture

The SEC reads ZH like deer in the headlights.

Tue, 09/25/2012 - 17:35 | 2829796 Darkness
Darkness's picture

BANKSTERS UNITE

Tue, 09/25/2012 - 17:46 | 2829844 LarryDavis
LarryDavis's picture

Here is another common Wall St. scam from the industry that makes returning 10% look like winning the lotto (when it barely beats inflation)..........I trade 8,000,000 shares in 8 nanoseconds through a prime broker and in exchange for that business he gets me IPOS or inside info. That's modern investing.

Tue, 09/25/2012 - 17:52 | 2829849 buzzsaw99
buzzsaw99's picture

"Yes, I know Stevie Cohen, and never did there live a kinder, more generous man. He is an overflowing cup, filled with the very cream of human goodness. In all the time I've known him he's never done anything immoral... [/hanover fiste] http://www.youtube.com/watch?v=tHgMsvpFm08

Tue, 09/25/2012 - 18:00 | 2829878 DavosSherman
DavosSherman's picture

Octoous II. III. IV. V. VI. VII .....

Meanwhile 70% of all trades are HFT and based on inside information.

Tue, 09/25/2012 - 19:12 | 2830151 Downtoolong
Downtoolong's picture

This is your scum. This is your market on scum. Any questions?

 

Tue, 09/25/2012 - 19:35 | 2830227 azzhatter
azzhatter's picture

Speaking of cunts, where has little Timmay Geithner been lately?

Tue, 09/25/2012 - 19:38 | 2830245 Captain Benny
Captain Benny's picture

Can you say Dendreon?  The SEC as on their ass while Cohen worked his crime.

Tue, 09/25/2012 - 20:20 | 2830392 Watts_D_Matter
Watts_D_Matter's picture

Boy the SEC has nuts...all this before Yom Kipper.....I smell a discriminatory law suit....very anti Semitic.....

Tue, 09/25/2012 - 21:24 | 2830574 Colonel Klink
Colonel Klink's picture

So many criminal names here, I can't quite seem to make the common connection among many of them....

Just like the SEC and other regulatory bodies, I got nothing.  Can someone help me out here?

Wed, 09/26/2012 - 03:41 | 2831035 CompassionateFascist
CompassionateFascist's picture

It's a gender issue. They're all MEN. So let's let Nomi, Alice, Lauren, & Stacy run Wall St....ruhroh....more of that indefinable "connection".

Wed, 09/26/2012 - 00:43 | 2830920 RafterManFMJ
RafterManFMJ's picture

WTF? When is the SEC ever going to get off Wall Street's fucking back and let them efficiently allocate capital??

Wed, 09/26/2012 - 03:32 | 2831034 californiagirl
Wed, 09/26/2012 - 10:15 | 2831755 Remington IV
Remington IV's picture

Wow ... ?????

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