Michael Steinberg, the SAC Capital Advisers portfolio manager who was arrested at the crack of dawn last Friday morning probably envies former Goldman Sachs trader Matthew Taylor’s rush-hour surrender to the Federal Bureau of Investigation on Wednesday.
While Steinberg was led away in handcuffs as a Wall Street Journal reporter took shaky video footage of the scene outside his door at 6am, Taylor sauntered into FBI headquarters in New York on his own, at 8:30am, having had plenty of time to collect his wits with a cup of hot coffee.
The difference between Steinberg’s dramatic arrest and Taylor’s quiet surrender highlights a theatrical strategy the FBI and prosecutors use for big cases. It does not bode well for the other potential targets in the high-profile insider trading investigation into Steven A. Cohen’s $15 billion hedge fund, which increasingly seems to be the primary focus of the government’s attempt to go after wrongful trading in the hedge fund industry.
And that, of course raises, the question of who might be next SAC Capital trader federal authorities will go after. No one except the FBI, prosecutors and the U.S. Securities and Exchange Commission knows for sure, but the case against Steinberg does raise some uncomfortable questions for Gabriel Plotkin, a portfolio manager at SAC’s unit Sigma Capital Management. Plotkin, while not named in the Steinberg case, is identified as “Portfolio Manager B,” according to sources familiar with the matter, in the SEC’s civil complaint.
According to the Steinberg SEC complaint, Steinberg “arranged to share Dell inside information with another portfolio manager at Sigma,” who is afterward referred to as “Portfolio Manager B.” The complaint goes on to say that as a result of trading by Steinberg and “Portfolio Manager B” SAC clocked $6.4 million in a combination of profits and loss avoidances.