NEW YORK (AP) -- A senior portfolio manager for one of the nation's largest hedge funds was arrested Friday, accused of joining an insider trading conspiracy that the government said made more than $6 million illegally for the powerhouse investment company founded by billionaire businessman Steven A. Cohen.
The arrest broadens the government's probe of trading practices at SAC Capital Advisors, which manages $15 billion.
Two weeks ago, the Securities and Exchange Commission said that two affiliates of SAC Capital would pay more than $614 million in what federal regulators called the largest insider trading settlement ever. The settlement is subject to court approval.
In the latest development, Michael Steinberg, 41, pleaded not guilty Friday to insider trading charges only hours after being arrested at his Manhattan apartment. The charges were lodged in an indictment unsealed in U.S. District Court in New York City.
Steinberg, who has worked more than 15 years at SAC Capital Advisors and its Sigma Capital Management unit, was released on $3 million bail.
Assistant U.S. Attorney Antonia Apps told Judge Richard Sullivan that Steinberg made no statements to authorities after his arrest.
Steinberg's attorney, Barry Berke, said in a statement that his client "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 have increased speculation that the government is taking a hard look at the practices of the wealthy hedge fund owner.
In the January case, Cohen is repeatedly referenced in court papers as a "Hedge Fund Owner." He has not been charged and SAC spokesman Jonathan Gasthalter has said the company and Cohen are cooperating with the inquiry and "are confident that they have acted appropriately."
On Friday, Steinberg was 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.
Prosecutors said he made more than $1.4 million illegally in connection with trades involving Dell and Nvidia in 2008 and 2009. In a civil case filed Friday by the Securities and Exchange Commission, the agency said Steinberg's trades resulted in more than $6 million in illegal profits or avoided losses for the company.
"Steinberg essentially got an advance copy of Dell and Nvidia's quarterly earnings announcements, allowing him to trade on tomorrow's news today," said George S. Canellos, acting director of the SEC's Division of Enforcement.
The SEC said Steinberg used inside information to trade securities of Dell and Nvidia in advance of at least four quarterly earnings announcements by the companies.
Associated Press Writer Tom Hays contributed to this report
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