Former SAC Capital Advisors portfolio manager Mathew Martoma’s arrest came six years after he set upon a path that has led him to a choice: one between a trial that may land him in prison for decades, or a deal to implicate others, possibly including SAC founder Steven A. Cohen.
Martoma, 38, used illegal tips to help SAC make $276m on shares of pharmaceutical companies Elan Corp. and Wyeth LLC, according to the Justice Department and the Securities and Exchange Commission. Arrested last week, he is to appear today in Manhattan federal court for masterminding what the U.S. calls the most lucrative insider-trading case ever.
Bloomberg reports that it was Martoma’s six-year friendship with Dr. Sidney Gilman, an 80-year-old University of Michigan neurologist involved in a clinical trial of an Alzheimer’s disease drug, that led to his prosecution. Gilman was helping develop the drug for Dublin-based Elan and Wyeth, now owned by New York-based Pfizer Inc. He leaked data on the trial to Martoma, who advised Cohen on whether SAC should buy or sell Elan and Wyeth shares, authorities alleged. Gilman is cooperating with the probe.
The FBI described in its November 20th complaint a 'Hedge Fund Owner' who Martoma dealt with; the SEC, in its parallel suit, called the unidentified person 'Investment Advisor A'. Each refers to Cohen, according to a person familiar with the matter.
Martoma denies wrongdoing, and Cohen hasn’t been sued or charged. Though Martoma, who appeared in federal court in Florida last week, is unlikely to enter a plea today, his case is the first of SAC alumni to involve a matter directly tied to Cohen.
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image: © Lisamarie Babik