Another SAC Manager Found Guilty Of Insider Trading
Mathew Martoma, a former portfolio manager with SAC Capital Advisors, has been convicted of helping the hedge fund reap hundreds of millions of dollars in illegal trades based on inside information. His is the latest in a series of legal actions related to the firm owned by billionaire Steven A. Cohen.
Martoma, 39, was found guilty by a federal jury in Manhattan on three counts of conspiracy and securities fraud related to trades made on inside information about a possible breakthrough in the treatment of Alzheimer's.
The verdict is the eighth insider trading conviction of a current or former employee at SAC.
As NPR's Jim Zarroli reported earlier this week:
"The government says he sold the shares after learning that clinical trials for the drug had produced negative results. The government's star witness was Sidney Gilman, a prominent neurosurgeon who headed the committee that was reviewing the tests. He said Martoma persuaded him to divulge the data. Gilman says he lied to the FBI when he was first questioned about the disclosure because he was intensely ashamed of what he had done."
In November, the firm pleaded guilty and agreed to pay a $1.2 billion fine and end its advisory business as part of a deal to settle with federal prosecutors who alleged insider trading going back all the way to 1999.
A month later, Michael Steinberg, another top portfolio manager at the firm, was also found guilty of insider trading.
The Associated Press says that as Thursday's verdict was read, Martoma "sat expressionless as the jury forewoman announced he had been found guilty of two counts of securities fraud and conspiracy to commit securities fraud. Tears streamed down the face of his wife, who sat with her hands folded on her yellow dress."
The AP says:
"Sidney Gilman, an 81-year-old former professor of neurology at the University of Michigan Medical School, testified that he gave Martoma the secret results of the drug trial sponsored by drug makers Elan Corp. and Wyeth nearly two weeks before they were publicly announced."
"He said he was charmed by Martoma, 39, who seemed more knowledgeable about his work than hundreds of others in the financial community who paid Gilman more than $1 million over several years for consultations."
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