Jon Horvath’s memory failed him again during the insider trading trial of his former boss, Michael S. Steinberg, once a top trader at the hedge fund SAC Capital Advisors.
In court on Wednesday, Mr. Horvath struggled to recall how he came to learn that a friend, who was an analyst at another hedge fund, was passing on illegal inside information about Dell Inc.
“I don’t remember when I figured it out,†Mr. Horvath, 44, testified. “Clearly in 2008, I was aware I got†inside information several times, he said.
It was the second day in the Federal District Court in Lower Manhattan that Mr. Horvath’s memory failed him during cross-examination by Mr. Steinberg’s lawyer, Barry H. Berke. On Tuesday, Mr. Horvath had trouble remembering when he made a document for himself titled “Jon’s trading rules†and said that he might have been wrong on the timing of a meeting he had with Mr. Steinberg in August 2007, when he said that his boss had pressured him to get more “edgy, proprietary information†about publicly traded securities.
Mr. Horvath said that he had interpreted the message from Mr. Steinberg as a directive to “cultivate sources of nonpublic information.†But he also said that Mr. Steinberg, 41, never explicitly told him to break the law by seeking out inside information on the technology stocks he followed.
It is not clear what impact the memory lapses will have with the jury. A major component of Mr. Steinberg’s defense strategy is to poke holes in Mr. Horvath’s credibility and raise doubts about whether Mr. Steinberg knew that some of the financial information his employee was getting was obtained illegally.
Mr. Horvath, who pleaded guilty to securities fraud charges in September 2012, is testifying against his former boss in the hopes of receiving a lenient sentence or avoiding jail time altogether.
The trial comes just weeks after SAC Capital, the hedge fund founded by Steven A. Cohen, pleaded guilty to securities fraud charges, while agreeing to pay $1.2 billion in fines and restitution and to stop managing money for outside investors. Mr. Cohen has not been criminally charged but securities regulators have filed an administrative action accusing him of failing to properly supervise his employees.
Mr. Horvath received his information about Dell from a friend, Jesse Tortora, who at the time was an analyst at hedge fund Diamondback Capital Management. Mr. Horvath also received information from another technology stock, Nvidia Corporation, from others.
Mr. Horvath previously testified that his former boss was fully aware that some of the information he was getting from Mr. Tortora and others was coming from people in possession of nonpublic financial information. But during cross-examination, Mr. Berke got Mr. Horvath to acknowledge that Mr. Steinberg’s contacts with Mr. Tortora were limited at best.
Mr. Horvath said that he was not aware of Mr. Steinberg’s having any direct contact with Mr. Tortora in 2008, when the improper trading in Dell was thought to have taken place. Mr. Horvath also testified that Mr. Steinberg tried to help Mr. Tortora get a job in early 2007 largely as a favor to him.
“I thought he would make a good hedge fund analyst,†Mr. Horvath said. “That is why I asked Mike to help.â€
Earlier in the trial, Mr. Tortora, who also pleaded guilty to insider trading charges, testified that he provided Mr. Horvath with inside information ahead of Dell’s August 2008 earnings report. Prosecutors say that Mr. Steinberg, relying in part on that inside information, made $1 billion by selling and short-selling Dell’s shares.
