Manager At Stamford-Based SAC Capital Convicted Of Insider Trading

  • Comment
Former SAC portfolio manager Mathew Martoma was found guilty of insider trading on Thursday, Feb. 6. Photo Credit: Wikimedia Commons

STAMFORD, Conn. -- A portfolio manager for a division of Stamford-based SAC Capital Advisors was found guilty in the largest insider trading scheme ever prosecuted on Thursday, Feb. 6, according to the U.S. attorney's office. 

Mathew Martoma, 39, obtained inside information about various pharmaceutical companies that were developing an experimental drug to combat Alzheimer's disease and used that knowledge to cull $275 million in illegal profits for SAC as well as a $9 million bonus for himself.

Martoma, a portfolio manager of CR Intrinsic Investors, a division of SAC Capital, was convicted after a four-week jury trial presided over by U.S. District Judge Paul G. Gardephe.

"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," Preet Bharara, U.S. attorney for the Southern District of New York, said in a statement. "In the short run, cheating may have been profitable for Martoma, but in the end, it made him a convicted felon, and likely will result in the forfeiture of his illegal windfall and the loss of his liberty."

Bharara went on to say that Martoma is the 79th person to be convicted of insider trading in the Southern District of New York over the last four years. 

Martoma obtained insider information by using expert networking firms to speak to doctors involved in the experimental drug's trial beginning in 2006. 

By spring 2008, Martoma had purchased and held shares in the company Elan and Wyeth and further recommended that Greenwich resident and SAC owner Steven A. Cohen do the same. 

In July 2008, Martoma and one of his inside contacts, Dr. Sidney Gilman, met in Detroit to discuss the negative results from the drug trial before they were released to the public. Shortly thereafter, SAC began to liquidate nearly $700 million worth of holdings in the pharmaceutical company. 

Martoma was convicted of of one count of conspiracy to commit securities fraud and two counts of securities fraud. He faces a maximum penalty of five years in prison for the conspiracy charge and 20 years in prison on each of the two securities fraud charges. He also faces a maximum fine of more than $5 million, according to the U.S. attorney. 

No charges have been brought against Cohen to date. 

  • Comment

Comments

In Other News

News

Another Cold Night In Fairfield Could Bring Frost

News

Group Fights To Save Fairfield Home Of Aviator Gustave Whitehead

Obituaries

Christopher Lance Cook, 48, Of Fairfield

Opinion

Fairfield Letter: SHU Ousts Active Older Adults From Pitt Center