By David Ingram
NEW YORK (Reuters) - The federal prosecutor in Manhattan said on Thursday he would move to dismiss charges against Michael Steinberg, formerly a top portfolio manager at SAC Capital Advisors, and six others who were convicted in an alleged insider trading scheme.
U.S. Attorney Preet Bharara said in a statement that the reason for his decision was a December ruling from a federal appeals court that more narrowly defined what constitutes insider trading. The U.S. Supreme Court this month declined a request by prosecutors to review that ruling.
Steinberg had been sentenced to 3-1/2 years in prison after his 2013 conviction at trial.
But then last year, the 2nd U.S. Circuit Court of Appeals in effect rewrote insider-trading law. The appeals court threw out the 2012 convictions of hedge fund managers Todd Newman and Anthony Chiasson, saying the government had over-reached.
"These prosecutions were all undertaken in good faith reliance on what this office and others, including able defense counsel for all those who pled guilty, understood to be the well-settled law before Newman," Bharara said in the statement.
Bharara also said it "would not be in the interests of justice" to insist on maintaining guilty pleas by six cooperating witnesses who pleaded guilty as part of the same alleged scheme.