Steven Cohen

U.S. prosecutors on Friday charged Michael Steinberg, a veteran portfolio manager with Steven A. Cohen’s $15 billion hedge fund, with engaging in insider trading in two technology stocks, the most senior SAC Capital Advisors employee to be charged in the government’s long-running probe.

The five-count indictment was announced a few hours after Federal Bureau of Investigation agents arrived at Steinberg’s home in New York City at around 6 a.m. ET and arrested him.

Federal prosecutors are charging Steinberg, 40, with using inside information to make trades in shares of Dell and chipmaker Nvidia that generated about $1.4 million in illegal profits for Cohen’s hedge fund…

SAC Capital spokesman Jonathan Gasthalter said: “Mike has conducted himself professionally and ethically during his long tenure at the firm. We believe him to be a man of integrity…”

In a related civil complaint against Steinberg, the U.S. Securities and Exchange Commission said the information allowed Steinberg to generate $6.4 million in profits and avoided losses for Cohen’s hedge fund.

Steinberg is one of nine current or former employees of SAC Capital who have been charged or implicated with insider trading while working at Cohen’s 2-decade-old hedge fund…

The arrest comes two weeks after SAC agreed to pay a record $616 million to the SEC to settle civil charges of insider trading. SAC neither admitted nor denied wrongdoing at that time.

But the government made clear that that settlement did not preclude further charges.

The DOJ’s policy on Wall Street – in general – is to bust the little fish, negotiate a deal on jail time to get them to testify against the heavy hitters at the top of the pyramid. Then, they settle for a chunk of money from the firm’s coffers. Unfortunately, in an era of untouchable Wall Street bosses, that’s not sufficient to make any changes in behavior.

The name of the game is Never Steal Anything Small. When you have the top man at SAC spending over $100 million for a Picasso for his new $60 million beach cottage – he may whine over the fine; but, staying outside of the slammer is what really counts. He can always hustle more money.