Martoma Loses Dismissal Bid

Dec 18 2013 | 12:21pm ET

Former SAC Capital Advisors trader Mathew Martoma will face all three insider-trading charges against him—and in full—at his trial next month.

U.S. District Judge Paul Gardephe yesterday rejected a motion from Martoma's lawyers to dismiss one of the two securities fraud allegations against him and to cut back on the related conspiracy charge. Martoma's legal team cited a 2010 U.S. Supreme Court ruling that U.S. securities laws do not cover transactions on foreign exchanges.

One of the companies Martoma is accused of illegally trading is Elan Corp., an Irish pharmaceutical company.

But, Gardephe noted, Martoma traded Elan American depositary receipts traded on the New York Stock Exchange. "The formation of contracts for those trades, the passing of title to those securities, and the incurring of liability on the part of sellers and purchasers of those ADRs occurred in the United States," the judge ruled.

Martoma's trades in Elan and Wyeth LLC were based on tips from Sidney Gilman, a doctor overseeing drug trials for the companies, according to prosecutors. The trades allegedly earned or saved SAC a combined $276 million.

Martoma's trial is set to begin on Jan. 6.

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