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INDIA IN NEW YORK FEBRUARY 14, 2014
Largest Insider Trading Case
MATHEW MARTOMA FOUND GUILTY
Preet Bharara’s perfect score continues with 79th
insider trading conviction. George Joseph reports
Mathew Martoma walks out
of the courthouse in New York
with wife Rosemary, February
6, after his conviction.
A
t court room 110 at the Thurgood
Marshall Court House on Foley
Street, Manhattan, Mathew
Martoma sat expressionless and
his wife Rosemary, a pediatrician,
wept. His parents and a few relatives sat shocked in the front row.
The jury forewoman had just announced —
on the third day of deliberations after a month
long trial — that he had been found guilty on all
three counts in the largest insider trading case.
The 39-year-old former SAC Capital portfolio
manager was arrested in 2011 from his home in
Florida and charged with secretly obtaining
information about clinical tests of an experimental drug for Alzheimer’s disease, conducted
by Elan and Wyeth, which caused SAC to divest
stocks worth $700 million in these companies
— not just avoiding losses on these stocks
before bad news about the clinical trials became
public knowledge but making $276 million in
profits.
He had consistently refused to plead guilty or
cooperate with the prosecution against his former boss, SAC owner Steve Cohen and now
faced 45 years in prison: 20 years on each of the
two securities-fraud counts and five years for
the single conspiracy charge.
Once the jury, of seven women and five men,
announced its decision, the proceedings lasted
less than half an hour.
With this, the office of the District Attorney of
the Southern District of New York, Preet
Bharara, has won all 79 cases it has filed in
insider trading. Some of the accused were convicted and others pleaded guilty.
‘Cheating may have been profitable for
Martoma, but in the end, it made him a con-
EDUARDO MUNOZ/REUTERS
victed felon,’ Bharara said in a statement.
‘As the jury unanimously found, Martoma cultivated and purchased the confidence of doctors
with secret knowledge of an experimental
Alzheimer’s drug, and used it to engage in illegal insider trading. Martoma bought the answer
sheet before the exam — more than once —
netting a quarter billion dollars in profits and
losses avoided for SAC, as well as a $9 million
bonus for him.’
Martoma is the eighth current or former SAC
Capital employee charged with insider trading.
The other seven pleaded guilty or were convicted at trial.
Defense lawyer Richard Strassberg — who
has maintained that Martoma was wrongfully
charged as part of the government’s efforts to
get information against Cohen, who was never
charged even though his hedge fund pleaded
guilty to criminal insider-trading charges and
settled it paying $1.8 billion — sa