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 Sandeep Goyal, a former Neuberger Berman analyst, is the third
member of what prosecutors call a "corrupt circle" of Wall Street
analysts to testify in Steinberg's federal trial. Steinberg is the
highest-ranking employee at Steven A. Cohen's hedge fund to face
criminal charges for insider trading.
Goyal, who has been cooperating with prosecutors, told jurors in
U.S. District Court in New York that the information he got from his
friend at Dell was so detailed he could easily calculate earnings
per share ahead of the computer company's earnings announcements.
"It was a simple process," he said.
Steinberg, 41, is facing five counts of securities fraud and
conspiracy to commit securities fraud for trades in Dell and
computer chip maker Nvidia Corp <NVDA.O> that prosecutors say were
based on insider information. He denies wrongdoing.
He is one of eight employees at SAC Capital to face criminal insider
trading charges. The hedge fund itself agreed last month to plead
guilty to fraud charges and pay $1.2 billion in penalties and
forfeitures.
Goyal's testimony showed one link in a long chain of tips that
prosecutors say leads to Steinberg. Goyal's testimony also helped
explain the benefits tippers received along the way, which
prosecutors need to prove to secure a conviction.
Goyal, who pleaded guilty to conspiracy to commit securities fraud
and securities fraud in 2011, said that starting in 2007 he began
getting tips about Dell's revenue, gross margins and operating
expenses from an employee in the company's investor relations
department.
The employee, Rob Ray, was a friend from business school, Goyal
said. At the time, Goyal said he was giving Ray tips on how to
secure a job in the investment management industry.
Ray has not been charged, and his attorney, Joanna Hendon, said he
"is innocent of any wrongdoing."
"He took Goyal's calls at Dell because it was his job to make
himself available to analysts and because his bosses told him to be
especially solicitous of analysts at the fund where Goyal worked,"
Hendon said in an email.
At trial, Goyal said he passed Ray's information on to Jesse Tortora,
his former boss at the equity research department of Prudential
Financial Inc, who was at the time an analyst at hedge fund
Diamondback Capital Management. "I got inside information and gave it to Jesse Tortora," Goyal said.
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Tortora, in exchange, began directing payments to Goyal through an
arrangement with the Neuberger Berman analyst's wife, he said. From
2008 to 2009, Goyal said Tortora paid them $175,000.
Tortora, who testified earlier in the case, said he was passing the
information on to others, including Jon Horvath, then an analyst
under Steinberg at SAC's Sigma Capital Management division.
Horvath, a star witness in the case, has testified he then provided
the Dell information to Steinberg. Both Tortora and Horvath have,
like Goyal, pleaded guilty to charges including conspiracy to commit
securities fraud and securities fraud.
Thursday's proceedings marked the second time Goyal has been called
as a witness as part of the broad insider trading crackdown being
waged by prosecutors under Manhattan U.S. Attorney Preet Bharara.da
Last year, Goyal testified in the trial of Todd Newman, a former
portfolio manager at Diamondback Capital Management, and Anthony
Chiasson, a co-founder of Level Global Investors.
Newman and Chiasson were convicted in December 2012 and later
sentenced to 4-1/2 years and 6-1/2 years in prison, respectively.
They are out on bail pending appeal.
The case is U.S. v. Steinberg, U.S. District Court, Southern
District of New York, No. 12-cr-00121.
(Reporting by Nate Raymond in New York;
editing by Jonathan Oatis)
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