The federal trial of former portfolio manager of SAC capital Mathew Martoma, who is charged with insider trading, has headed towards the jury this Tuesday. Federal prosecutors and law-enforcers from the Southern flank of New York have accused and charged the manager with dual counts of conspiracy to commit or maneuver securities fraud and securities fraud. He is alleged to have obtained inside information regarding drug stocks called Wyeth and Elan in a short, palpable scheme worth $276 million. The most serious charge in this context is securities fraud, which can carry a jail sentence up tp 20 years.
The accused in one of the 87 defendants trapped in a federal crackdown on the gamut of insider trading. The high-flying ranks comprise a Greenwich hedge fund, eight SAC capital operatives and Conn. These are founded and operated by billionaire Steve Cohen. Federal officers say that Martoma had held many secret meetings with one neurologist called Dr. Sidney Gilman to derive inside details about an experimental Alzheimer’s drug. This enabled him to dump the concerned stocks before the futile experiments were unraveled. Federal prosecutor Eugene Ingoglia says that the accused “needed an early warning system” and described Dr Gilman as Martoma’s “canary in a coalmine.”
The initial triumph of the drugs early exploits provoked Martoma to make New Jersey drug-baron Wyeth and Irish biotech Elan his main stock recommendations, the feds said. He allegedly propelled SAC capital to purchase 6.8 million shares of Wyeth and 10 million from the other, which was $700 million. But, in 200b federal officials discerned that Gilman informed Martoma about the imminent failure of the drug. This allowed him to warn the company to secretly unload millions of shares within days before e medical conference on July 28, the same year. The company amassed $276 million in profits and no losses. U.S lawyer Preet Bharara termed this as the “most lucrative insider trading scheme every charged.” Martoma obtained $9.3 million bonus the next year.
However, defense attorney Richard Strassberg antagonized federal dependence on Gilman, claiming that he was lying and contained a nuanced memory. He criticized the authorities for lack of real or hard proof, since the phone and email communication records between the accused parties do not entail specific or exact mention of insider trading. The lawyer said that his client is “just a sand grain” in the federal bid to contradict someone who is not present in this courtroom. This person is Steven Cohen. The latest SAC case of some convicted co-workers pleading guilty to insider trading has put Martoma in troubled waters.