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Two days before Dell Inc. was set to report second-quarter 2008 earnings, Jon Horvath, a technology analyst at SAC Capital Advisors LP, e-mailed his boss Michael S. Steinberg and another portfolio manager to warn that the computer maker would miss earnings estimates.

“I have a 2nd hand read from someone at the company,” Horvath began the Aug. 26 message, which provided details on gross margins, expenditures and revenue. “Please keep to yourself as obviously not well known.”

Steinberg, a 15-year veteran of the hedge fund founded by billionaire Steven A. Cohen, responded: “Yes normally we would never divulge data like this, so please be discreet. Thanks.”

The e-mails indicate Steinberg, the longest-serving SAC employee linked to the U.S. insider-trading probe, discussed the Dell trade with Cohen. While neither has been accused of any wrongdoing, the messages were admitted as evidence at the New York insider-trading trial of two hedge-fund managers last week after a judge ruled they supported prosecutor claims that Steinberg should be considered an unindicted co-conspirator.

Last month, Cohen, 56, was directly linked to a trade at the center of another insider prosecution, which the government described as the “most lucrative” ever uncovered. SAC, which is based in Stamford, Connecticut, and manages $14 billion, was told by the Securities and Exchange Commission that the agency is considering pursuing civil fraud claims related to alleged insider trading by former SAC portfolio manager Mathew Martoma, who traded stocks of two drug makers.

SAC Investigations

The Federal Bureau of Investigation and the SEC are also probing trades that SAC Capital made in shares of InterMune Inc., a Brisbane, California-based biopharmaceutical company, and Weight Watchers International Inc., a person familiar with the matter said earlier this month.

Steinberg, 40, worked at SAC’s Sigma Capital Management unit and was one of 15 portfolio managers handling technology, media and telecommunications stocks before he was placed on leave in September.

Horvath was scheduled to go on trial with the two fund managers, who were convicted today in Manhattan federal court. Instead, he pleaded guilty to conspiracy and securities fraud in September related to the Dell trade and said he had passed confidential information to his portfolio manager, who, he said, traded on the tips.

While Horvath didn’t name Steinberg as part of his plea, prosecutors alleged during the recent trial that Steinberg received the information and traded on the tips.

Swapped, Funneled

The government said that Horvath was part of a group of friends who were analysts at hedge funds who swapped nonpublic information from company insiders funneled to them from Jesse Tortora, an analyst at Diamondback Capital Management LLC.

The messages exchanged among Horvath, Steinberg and another SAC portfolio manager, Gabe Plotkin, show that Steinberg consulted with Cohen about the August 2008 Dell trade.

“Guys, I was talking to Steve about Dell earlier today and he asked me to get the two of you to compare notes before the print, as we are on opposite sides of this one,” Steinberg wrote to Horvath and Plotkin.

Plotkin, who hasn’t been accused of wrongdoing, is one of 10 portfolio managers at Sigma focusing on consumer stocks. He joined SAC in 2006 and is among the firm’s top portfolio managers, overseeing more than $1 billion, according to a person with knowledge of the firm.

Missed Projections

On Aug. 28, 2008, Dell’s earnings missed analysts’ projections, sending its stock down 14 percent the next day, the most in almost eight years. Prosecutors said Steinberg shorted Dell securities based on Horvath’s information, earning the hedge fund about $1 million.

The e-mails were made public as part of the month-long trial of Level Global Investors LP co-founder Anthony Chiasson and former Diamondback Capital fund manager Todd Newman. Both were convicted of reaping more than $70 million on trades based on illicit tips. They face as long as 20 years in prison at sentencing.

The e-mails don’t show if Steinberg relayed the insider information on Dell to Cohen, or that Cohen or Plotkin ever traded on Horvath’s information or knew it was confidential, a requirement for any insider trading allegation.

The e-mails are just an example of the vast array of evidence that the FBI has amassed against hedge funds, including SAC, in the government’s five-year crackdown on insider trading. Since the law enforcement initiative began, at least six current or former SAC employees have been tied to allegations of insider trading. Three have pleaded guilty to federal charges.

Cohen’s Link

Last month, for the first time, Cohen was connected to transactions at the center of an insider-trading case, when Martoma, the ex-SAC portfolio manager, was charged with trading shares of Elan Corp. and Wyeth LLC based on inside information. Prosecutors said Martoma shared his information with the hedge-fund owner, Cohen, who then traded on it.

Jonathan Gasthalter said last month that Cohen and SAC are confident they acted appropriately and will continue to cooperate with the government’s inquiry. He declined last week to comment on the Dell e-mails.

Steinberg joined SAC in 1997, at the age of 25 when the firm was a collection of about 50 employees managing mostly the founder’s own money. He was part of a group that socialized with Cohen, taking vacations in places like the Bahamas, going to basketball games and to parties at Cohen’s mansion, according to a person with knowledge of the firm.

Wedding Guest

One of Steinberg’s colleagues was Richard Choo-Beng Lee, who worked at SAC from 1999 to 2004. Lee was among those charged in November 2009 with insider trading at another firm, the first time a former SAC employee was tied to the government’s probe. He pleaded guilty and cooperated with the government’s Galleon Group LLC hedge fund insider-trading case.

Noah Freeman, another former SAC fund manager who pleaded guilty and is cooperating, testified last year that he had committed insider trading while at SAC. He has since provided information to federal authorities on more than a dozen people he said he knew were committing securities fraud related to technology stocks.

Steinberg grew up in Great Neck, Long Island, and graduated in 1994 from the University of Wisconsin in Madison with a degree in philosophy and history, the university said. According to a New York Times announcement, he married Elizabeth Sims in 1999 in New York. Cohen was a guest at the wedding, a person with knowledge of the matter said.

A ‘Mensch’

Friends and former colleagues said Steinberg is amicable and well-liked. One friend, who asked not to be identified because he didn’t want to publicly discuss his friendship, described him as a “mensch,” a Yiddish term for an honorable and decent person.

Together with three other hedge-fund managers, he started Natan, a network of young philanthropists who hold events to promote Jewish culture and Israel, according to its website. He lives in Manhattan in a Park Avenue apartment, which he bought for $8 million in 2009, according to Streeteasy.com.

U.S. District Judge Richard Sullivan, who is presiding over Newman and Chiasson’s case, ruled on Dec. 6 that Steinberg was an uncharged conspirator in Horvath’s insider-trading scheme. Steinberg’s lawyer, Barry Berke, declined to comment on the e-mails or the judge’s ruling.

Assistant U.S. Attorney Antonia Apps argued the SAC e-mails were relevant because they showed Steinberg was aware Horvath had a source inside Dell who had previously provided “very good” data on the computer maker.

Final Information

She said the SAC messages show that in the days before Round Rock, Texas-based Dell’s scheduled earnings release, Horvath had obtained final information that the company would miss Wall Street estimates.

The e-mails indicate Horvath obtained insider information through a friend, described in the messages as “JT.”

Prosecutors said during the insider trading trial of Chiasson and Newman that JT is a reference to Tortora, who worked as a technology analyst for Newman. Tortora testified during the trial that he obtained inside information from Dell through a friend and shared it with Horvath and others. Tortora has pleaded guilty and is cooperating with the U.S.

“This e-mail is sensitive information and then two minutes later, Mr. Steinberg trades consistent with the information,” Apps told Sullivan at a hearing on the e-mails. “Steinberg fully understands that this is from somebody inside the company.”

Company Insiders

Prosecutors also showed the jury e-mails in which Tortora passed information from company insiders on to his group, who in turn shared it with their fund managers, including Steinberg.

Newman’s lawyer, Steve Fishbein, argued Horvath’s statement “someone at the company” was a reference to Dell investor relations. He said the stated warning in the e-mail to keep the matter “down low” was an effort by fund managers to keep proprietary trading information from leaking out.

“It makes common sense that when traders have legitimate ideas that they have developed through modeling or through whatever, totally legitimate, they do not share with other hedge funds,” Fishbein said. “It’s not that it means something improper.”

The judge ruled weighing the preponderance of evidence, which is a legal standard lower than that needed for a conviction, that Steinberg was conspiring with Horvath.

“It doesn’t look good” for Steinberg, Sullivan said, after reading the e-mail aloud. “It seems to me that the logical inference is that Steinberg knows exactly what’s going on,” the judge said. “Why would you need to keep statements from IR on the ‘down low’?”

Comparing Notes

Fishbein argued the e-mails showed fund managers were comparing notes about Dell and consulted Plotkin because they were unsure.

“Comparing notes is not in furtherance of the conspiracy,” the judge replied. “But having compared notes and having divulged the source of the information on gross margin, and then telling the other person who is on the other side, ‘By the way, don’t tell anybody about this, be discreet,’ that seems to me in furtherance of the conspiracy.”

The e-mail case is U.S. v. Newman, 1:12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).

(Updates with verdict in eighth paragraph.)