US probe widens into 'circle of greed' at SAC

Jon Horvath, a former analyst at SAC Capital Advisors who pleaded guilty to passing illegal tips to a manager at the hedge fund, also funnelled inside information to another supervisor, US regulators said in a lawsuit that may help accelerate the massive criminal investigation of SAC and its founder, Steven Cohen.

The Department of Justice and the Securities and Exchange Commission previously identified only one SAC fund manager that they said received and traded on illicit tips from Horvath. Since the government's five-year crackdown on insider trading began, at least six current or former SAC employees have been tied to allegations of insider trading. Four have pleaded guilty to federal charges.

SAC agreed last week to pay a record US$616 million to settle SEC allegations that Sigma Capital Management and another affiliate, CR Intrinsic Investors, made illegal trades using non-public information. Cohen has not been sued personally by the commission.

Horvath, who was a technology analyst at Sigma from 2006 to 2011, is co-operating with the insider-trading investigation by Manhattan US Attorney Preet Bharara's office and the Federal Bureau of Investigation in New York. Ellen Davis, a spokesman for Bharara's office, declined to comment on the SEC claims. The SEC said its investigation was continuing.

Horvath was charged last year with being part of "a tight-knit circle of greed", described by prosecutors as a group of hedge fund analysts and technology company employees who trafficked in inside information, allowing their funds to reap more than US$72 million in illicit profits.

When he pleaded guilty in September, Horvath told the judge presiding over his case that he provided illegal tips to his portfolio manager, who then traded on the information. While Horvath did not name his colleague in court, prosecutors said during a trial of two co-defendants that SAC manager Michael Steinberg was the recipient of his tips.

US District Judge Richard Sullivan in New York ruled in December that Steinberg was an unindicted co-conspirator in the scheme. Steinberg has denied any wrongdoing.