SAC CFO Says If Traders Are Down, They're Out

Jan 14 2014 | 11:52am ET

SAC Capital Advisors' CFO told jurors in the Mathew Martoma insider-trading trial that the firm doesn't have much patience with traders who lose money.

Daniel Berkowitz said that SAC's contracts contain so-called "down and out" clauses, specifying exactly how much traders can lose before they are fired. "If you're down that amount, you're out," Berkowitz said.

Berkowitz was the second witness called by prosecutors, who finished their questioning of Martoma's former analyst yesterday. Both men appear to have been brought to the stand to testify about the pressure felt by SAC managers to perform—pressure that prosecutors say led Martoma to mine sources for insider information.

Martoma himself was fired from SAC in 2010 for poor performance—two years after earning the huge returns for the firm that have him on trial in the first place. The jury won't hear about it, however: U.S. District Judge Paul Gardephe barred prosecutors from telling the panel about it.

Martoma is accused of obtaining confidential information about Alzheimer's drug trials from two medical professors, using the information to make trades that earned or saved SAC $276 million. Prosecutors say his is the "most lucrative" insider-trading scheme in history.


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