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Federal appeals court upholds Indian American Mathew Martoma’s conviction

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The former SAC trader Mathew Martoma was charged with insider trading in Nov. 2012.

A US Circuit Court of Appeals in New York refused Mathew Martoma’s appeal against his insider-trading conviction, New York Post reported on Wednesday. Martoma had appealed that improper instructions were given to the jury. However, federal appeals court’s three-judge panel rejected it in a 2-1 decision. The decision has come as a blow to Martoma, who had been awarded a nine-year imprisonment that would continue until 2021.

Martoma was convicted in 2014 and had been serving his term in the low-security Miami Federal Correctional Institution. The then-Manhattan US Attorney Preet Bharara had said in the judgment, “ SAC Capital portfolio manager Mathew Martoma received a bonus of more than $9 million for the $275 million he made for his hedge fund through the most profitable insider trading scheme ever charged.”

The order revealed that to obtain the “Inside Information” about the Drug Trial, Martoma started to speak to the doctors who were involved in the Drug Trial. It said that the Drug Trial results were negative, and in contrast with the market expectations. This, Martoma got to know through personal meetings with Dr Sidney Gilman, who was the chairman of the Drug Trial’s Safety Monitoring Committee (SMC).

After accessing the confidential information, Martoma sent an email to the SAC Capital Owner on Sunday, July 20, 2008. “The SAC Capital Owner then directed SAC Capital to sell Elan and Wyeth securities prior to the ICAD Presentation,” the 2014 judgment read. “Over the next seven days, SAC Capital liquidated its entire equity position in Elan and almost all of its equity position in Wyeth – a total of 17.7 million shares worth approximately $700 million. SAC Capital also shorted Elan and Wyeth by approximately 7.75 million shares. This trading represented over 20% of the reported U.S. trading volume in Elan and 11% of the volume in Wyeth.”