Martoma Got Tips From Two Doctors, Prosecutors Say

Aug 23 2013 | 5:34am ET

Former SAC Capital Advisors portfolio Mathew Martoma received confidential information from at least two doctors, prosecutors alleged in a revised indictment.

Martoma is accused of earning SAC hundreds of millions of dollars trading on tips about drug trials—allegations that are also part of the criminal case against the hedge fund itself.

One of his alleged sources, former University of Michigan medical professor Sidney Gilman, has admitted tipping Martoma and is cooperating with prosecutors. But the superseding indictment refers to a second doctor as a co-conspirator, although that person is not named.

As with Gilman, Martoma allegedly made contact with the second doctor through an expert network. The doctor, according to prosecutors, passed Martoma non-public information “with the expectation that Martoma would assist in obtaining additional clinical trial business.”

Martoma also e-mailed more than 20 doctors working on the clinical trial that Gilman was overseeing.

The new indictment could be an effort by the government to push Martoma to cooperate in the case against SAC. Martoma has pleaded not guilty and has thus far spurned approaches to turn on his former employer.

In the new indictment, prosecutors said that Martoma should forfeit at least $9.3 million, including his home in Boca Raton, Fla., and as much as $13.7 million.

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