NEW YORK -- A senior portfolio manager for one of the nation's largest hedge funds was arrested Friday, accused of making $1.4 million illegally in a widening insider trading probe involving an investment company founded by billionaire businessman Steven A. Cohen.
Michael Steinberg, 41, was arrested at 6 a.m. at his Manhattan home on insider trading charges lodged in an indictment unsealed in U.S. District Court in New York City. A senior portfolio manager at SAC Capital Advisors, he was scheduled to appear in court Friday.
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His attorney, Barry Berke, said in a statement that Steinberg "did absolutely nothing wrong." He said Steinberg's trading decisions were based on detailed analysis along with other information he properly obtained.
"Caught in the crossfire of aggressive investigations of others, there is no basis for even the slightest blemish on his spotless reputation," he said.
In a statement, SAC Capital said Steinberg "has conducted himself professionally and ethically during his long tenure at the firm. We believe him to be a man of integrity."
U.S. Attorney Preet Bharara said in a statement that Steinberg "was another Wall Street insider who fed off a corrupt grapevine of proprietary and confidential information cultivated by other professionals who made their own rules to make money. With lightning speed in at least one case, Mr. Steinberg seized on the opportunity to cash in and tried to keep his crime quiet, as charged in the indictment."
George Venizelos, head of the FBI's New York office, said the arrest was the latest in an FBI probe that has resulted in more than 70 arrests.
"Mr. Steinberg was at the center of an elite criminal club, where cheating and corruption were rewarded," he said. "Research was nothing more than well-timed tips from an extensive network of well-sourced analysts."
At least four other people associated with the Stamford, Conn.-based firm have been arrested over a period of about four years.
The arrest of Steinberg and the January arrest of a former hedge fund portfolio manager for an affiliate of Cohen's firm has increased speculation that the government is taking a hard look at the practices of the billionaire hedge fund owner. In the January case, Cohen is repeatedly referenced as a "Hedge Fund Owner" in a criminal complaint. He has not been charged in the case and SAC spokesman Jonathan Gasthalter has said the company and Cohen are cooperating with the inquiry and "are confident that they have acted appropriately."
In the latest case, Steinberg is charged with conspiracy to commit securities fraud and four counts of securities fraud, accused of using inside information as he made trades involving Dell Inc. and Nvidia Corp. securities. If convicted, he could face up to 85 years in prison.
Civil charges against Steinberg also were filed by the Securities and Exchange Commission.
On March 15, the SEC said that two affiliates of SAC Capital Advisors would pay more than $614 million in what federal regulators called the largest insider trading settlement ever. The settlement is subject to court approval.