Thursday, 27 October 2016
Last updated 14 hours ago
Jan 29 2014 | 12:03pm ET
Prosecutors in the Mathew Martoma trial rested yesterday following testimony that SAC Capital Advisors founder Steven Cohen wanted the trades at the heart of the case to be kept quiet.
SAC head trader Phillipp Villhauer told the jury that Cohen directed him to limit the "visibility" of a massive sell-off of two pharmaceutical companies. Prosecutors allege that Cohen ordered the sales after Martoma recommended them, based on confidential information about a drug trial he had received from a doctor.
"Steve wanted to start selling Elan and he wanted to put in accounts that didn't have as much visibility within the firm," Villhauer said. The trader explained he used accounts that only about 15 SAC employees—out of about 1,000—could see, and made the trades with algorithms and dark pools, rather than on public exchanges.
Under cross-examination, Villhauer said that there was "absolutely nothing improper" about selling the shares in that way, and that SAC frequently employed such techniques to avoid "slippage"—stock prices falling when it became apparent that SAC was selling.
Opening their defense, Martoma's lawyers called SAC's top lawyer, general counsel Peter Nussbaum. Nussbaum, who was only on the stand for 15 minutes yesterday, told the jury that SAC had an arrangement with former portfolio manager Wayne Holman to advise Cohen on Wyeth LLC, one of the companies Martoma is alleged to have improperly traded.
"He was expected to provide his advice on Wyeth to Steve," Nussbaum said.
Martoma's lawyers had hoped to read from a deposition given by Cohen, in which he indicates that Holman's recommendations carried more weight with him than Martoma's. U.S. District Judge Paul Gardephe rejected that request.