Martoma Bid To Stay Out Of Jail Rejected

Nov 13 2014 | 11:15am ET

Former SAC Capital Advisors trader Mathew Martoma’s reprieve from prison has proven brief.

The U.S. Second Circuit Court of Appeals, which last week kept the convicted insider-trader out of jail to consider whether he should remain free pending his appeal, decided after hearing arguments on the matter that Martoma should begin serving his nine-year sentence. When, exactly, Martoma will report to prison is up to the trial judge.

Martoma’s lawyers argued that U.S. District Judge Paul Gardephe should have allowed jurors to hear testimony SAC founder Steven Cohen gave to the Securities and Exchange Commission in 2012, which was “clearly exculpatory.” The panel disagreed, ruling that Martoma’s appeal “failed to show that the appeal ‘raises a substantial question of law or fact’” and was likely to result in a reversal.

Martoma had been set to begin his prison term on Monday.

The court has not yet ruled on the merits of Martoma’s appeal, in which he seeks that reversal. Martoma was convicted in February of the “most lucrative” insider-trading scheme in history, one which allegedly earned or saved SAC some $276 million. Martoma was found to have traded on confidential drug-trial information affecting two pharmaceutical companies. Gardephe, in rejecting an earlier bid by Martoma to stay out of jail, called the evidence against him “overwhelming.”

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