NEW YORK (AP) — Citing a recent court decision further defining insider trading law, federal prosecutors moved Thursday to dismiss charges against a former portfolio manager at one of the nation's largest hedge funds after he was convicted at trial and sentenced to over three years in prison.
Prosecutors filed papers with the 2nd U.S. Circuit Court of Appeals asking the court in Manhattan to return the case against Michael Steinberg to a lower court, where it can be formally dismissed.
Steinberg, 43, worked at the Stamford, Connecticut-based SAC Capital Advisors, which was founded by billionaire businessman Steven A. Cohen, before Steinberg was charged with conspiracy and securities fraud. He was convicted in May 2014 and sentenced to 3 1/2 years in prison. He has been free pending appeal.
In a statement, U.S. Attorney Preet Bharara announced that his office was seeking to drop the charges against Steinberg and six cooperating witnesses who pleaded guilty after the 2nd Circuit last December tossed out charges against two of Steinberg's co-defendants and fellow portfolio managers: Anthony Chiasson of New York and Todd Newman of Needham, Massachusetts. The appeals court said the men were too far removed from inside information to be prosecuted.
Bharara said continuing to pursue appeals against Steinberg and the others "would not be in the interests of justice" in light of the 2nd Circuit ruling. The action came after his office failed to convince the entire 2nd Circuit or the Supreme Court to hear an appeal of the December decision.
Barry Berke, a lawyer for Steinberg, said his client "did not commit any crime and is an innocent man."
He added: "We hope that his vindication will receive as much attention as his wrongful prosecution."
Steinberg joined SAC in 1996, working for a time in an office next to Cohen, before moving to the New York offices of its Sigma Capital division.
The case against Steinberg, Chiasson, Newman and others was the first to result from a probe of SAC Capital. The company in December 2013 agreed to pay a record $1.8 billion to settle civil and criminal insider trading charges.
In a statement, Jacqueline Arango, a lawyer for Jesse Tortora — one of the cooperators — said: "After five long years, my client is thrilled to be vindicated. Justice was served in the end."
Gregory Morvillo, Chiasson's lawyer, said there's a "huge amount of human tragedy in the wake of this case."
"There's the old line of 'where do I go to get my reputation back,' and I think that applies to many if not all of these people," he said, noting that many workers who were never a subject of the probe lost their jobs as a result of the investigation.
"I'm not sure it is one of these 'all's well that ends well' situations," he said. "A lot of people were hurt and a lot of people were harmed by this."