Insider-trading case will now be heard on June 5.
NEW YORK: Former SAC Capital Advisors LP fund manager Mathew Martoma was granted 90 days to review U.S. evidence in his insider-trading case, including hundreds of thousands of e-mails from the fund.
Martoma was charged in November in what the office of Manhattan U.S. Attorney Preet Bharara called the biggest insider-trading scheme in history. The U.S. says Martoma helped SAC, the hedge fund founded by Steven A. Cohen, make $276 million on an illegal tips about an Alzheimer’s drug by trading in shares of Elan Corp. and Wyeth LLC, reported Bloomberg.
Charles Stillman, Martoma’s defense lawyer, told U.S. District Judge Paul Gardephe today that he needed time to review the evidence, including about four million pages of documents which the U.S. already has turned over. Stillman estimated there were hundreds of thousands of e-mails left to review before he can assess how to defend his client.
In recent days, Stillman said he has received at least 17,000 pages of evidence from the government. He held up a folder he estimated to be about six inches thick, which he said represented the number of e-mails Martoma exchanged and received in a single day of work at SAC’s CR Intrinsic Investors in Stamford, Connecticut, said the Bloomberg report.
Gardephe granted Stillman’s request and set the next court date for June 5.
Stillman also said the government has a computer hard drive belonging to a cooperating witness, identified by the U.S. Securities and Exchange Commission as Dr. Sid Gilman, a University of Michigan neurologist who was head of the safety monitoring committee for the drug trial. Gilman entered into a non-prosecution agreement and is cooperating with the U.S.
Stillman said that prosecutors have told him the hard drive may contain privileged and encrypted material. Assistant U.S. Attorney Arlo Devlin-Brown said Federal Bureau of Investigation agents were attempting to decrypt the hard drive.
According to an indictment filed by Bharara’s office in December, Martoma bought shares of Elan and Wyeth for his portfolio. The hedge fund owner, identified as Cohen by a person familiar with the case, also bought Elan and Wyeth, based on Martoma’s recommendation, prosecutors said, said Bloomberg.
In July 2008, Gilman passed Martoma secret data showing that bapineuzumab, or bapi, a drug intended to treat Alzheimer’s disease, had failed to halt the condition’s progress in clinical tests, the SEC alleged. The hedge fund owner, at Martoma’s recommendation, sold off almost all of the fund’s $700 million position in Elan and Wyeth, then sold the stock short, prosecutors claimed.
When the clinical trial results became public, shares in both companies plunged, allowing the hedge fund to make $276 million in profits and losses avoided, according to the government. Martoma received a $9.3 million bonus as a result, according to the indictment.