Tuesday, 21 October 2014
Last updated 23 min ago
Jan 23 2014 | 12:45pm ET
Some of the information former SAC Capital Advisors portfolio manager Mathew Martoma allegedly traded on wasn't as secret as has been portrayed, the government's star witness in the insider-trading trial conceded yesterday.
Sidney Gilman, who has admitted to passing confidential tips about an Alzheimer's drug trial to Martoma, faced cross-examination by the former hedge fund manager's lawyers yesterday. And he acknowledged that some of the details he had testified about had been previously disclosed to the public.
Under questioning by prosecutors, Gilman, a former medical professor at the University of Michigan, noted that Martoma was particularly interested in one side-effect, a brain swelling known as vasogenic edema. But he said yesterday that the side-effect had been disclosed as part of an earlier trial, more than two years before Martoma's allegedly insider trades.
In addition, Martoma's lawyer, Richard Strassberg, showed the jury a series of e-mails between Gilman and a journalist in 2006 in which the former wrote, "the fact that the trial continues is the news; this therapy is being tolerated despite adverse events among some of the subjects."
According to Strassberg, Gilman didn't stop there, speaking about the side-effect on a conference call with clients of expert network Gerson Lehrman Group in April 2008, two months before he disclosed the allegedly crucial information to Martoma. Gilman said he didn't recall exactly what he said on the call, but that he might have spoken about vasogenic edema.
"I suspect I was very cautious about telling them about the phase II trial," he said. "I really shouldn't have been discussing it at all."
Strassberg suggested that Gilman was discussing it because he had more than doubled his income moonlighting as a consultant—which is how he met Martoma in the first place. Gilman acknowledged he held more than 400 consultations with more than 300 clients between 2006 and 2008, earning between $340,000 and $425,000 per year doing it.
Prior to Strassberg's questioning, prosecutors wrapped up their examination of Gilman. The doctor testified that he didn't remember some details of a key 2008 meeting with Martoma—and some of the details he did remember only returned to him recently.
"About two weeks ago, I recalled what I related today," Gilman said. "There still remains some holes in my memory, though."
Gilman told the jury he was "reasonably confident, but not certain" that he'd sent Martoma slides from a presentation he was to give on the trials in advance of their being made public.
Gilman said he last met with Martoma on July 30, 2008, a day after he presented the disappointing results of the drug trial—and, according to prosecutors, nearly two weeks after he had given Martoma advance word of them. "The first thing he said to me is, 'Did you hear about what happened to Elan stock?' And I said, 'No, that's not what I do, not what I usually attend to.' And he said, 'Well, it dropped like a rock,' or something like that."
Gilman, who previously testified that Martoma had sought to ingratiate himself with the doctor and had expressed a desire to be friends, said that he didn't hear for Martoma for at least two months afterwards.
"I thought we were friends," Gilman said. "And I thought he would be in touch, just to say hello."
After ending early on Tuesday due to the snowstorm in New York, things got off to a late start yesterday after one of the jurors didn't arrive on time. U.S. District Judge Paul Gardephe dismissed the 25-year-old woman from the Bronx from the jury, noting that she had been "chronically late" and "was not paying attention" to the trial.
"What I mean by that is it appeared to me that she was asleep during parts, significant parts, of Dr. Gilman's testimony," the judge said.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...