Thursday, 25 August 2016
Last updated 6 hours ago
Feb 6 2014 | 2:54pm ET
Former SAC Capital Advisors trader Mathew Martoma was convicted of insider-trading charges today, the 79th person to be found or plead guilty of such charges since 2009.
The jury took two-and-a-half days to reach the verdict on the conspiracy and securities fraud charges, delivering it this afternoon in Manhattan federal court. The 39-year-old Martoma faces decades in prison, and is likely to be sentenced to between seven and 10 years behind bars; no sentencing date was announced.
Martoma was expressionless as the verdict was read. His wife, Rosemary, cried.
Martoma is the eighth former SAC employee to be convicted of insider-trading during the government's crackdown on the crime. Prosecutors said he earned or saved SAC $276 million trading on confidential information about an Alzheimer's drug trial.
The verdict comes a day after the jury reviewed testimony from a key defense witness, Thomas Wisniewski. Wisniewski, a medical professor at New York University, told the panel that the information Martoma allegedly received from another doctor was substantially the same as that publicly released by the two pharmaceutical companies developing the Alzheimer's drug.
That testimony was apparently not enough to impeach the story told by Sidney Gilman, the government's star witness. Gilman, who oversaw the safety committee for the drug trial, testified that he routinely passed secret information about the tests to Martoma. The defense sought to discredit the 81-year-old's memory, to no avail.
Prosecutors showed that Martoma had a 20-minute conversation with SAC founder Steven Cohen after a July 2008 meeting with Gilman, during which Gilman testified that he warned Martoma of disappointing results. The following day, Cohen ordered SAC's head trader to quietly unload the hedge fund's entire $700 million stake in the two drug companies, Elan Corp. and Wyeth LLC.
Cohen has not been charged criminally, although Gilman said that he was the government's ultimate target in the investigation. Cohen does face Securities and Exchange Commission allegations of failure to supervise his employees.
To date, federal prosecutors have an unbeaten record in insider-trading cases during the recent crackdown, without a single acquittal won by a defendant. Martoma's conviction comes roughly seven weeks after another SAC portfolio manager, Michael Steinberg, was found guilty of separate insider-trading allegations.