A former trader for SAC Capital Advisors is scheduled to appear in court this morning. Mathew Martoma is one of several SAC traders facing accusations of insider trading from the federal government. Today’s court date is scheduled for Federal District Court in Manhattan. Martoma faces two counts of securities fraud and one count of conspiracy.
Last week, ValueWalk reported that in July 2008, the hedge fund advisors gained more than $276 million illegally by selling shares of Wyeth Limited (NSE:WYETH) and Elan Corporation, plc (NYSE:ELN) before the negative clinical trial results for their jointly developed Alzheimer drug were released. The shares sold by the hedge fund were worth approximately $700 million at the time. According to DealBook, Martoma allegedly corrupted Dr. Sidney Gilman, who had access to study results on new drugs, and used information from the doctor to avoid losses and gain profits for the hedge fund.
According to the complaint from the Securities and Exchange Commission, in January 2009, Martoma received a bonus of $9.4 million, due to the profits the hedge fund earned from the early trades on the Wyeth and Elan shares. A spokesperson for Martoma said he believed he had acted appropriately under the circumstances.
Possible Involvement By Cohen?
Prosecutors say the scheme involving Martoma is the most lucrative insider-trading case they’ve ever encountered. They also say that this case is the first one in which the evidence seems to indicate involvement by SAC manager Steven Cohen. Investigators are currently looking into exactly what information Martoma allegedly told Steven Cohen in 2008 when he advised him to trade the shares of Wyeth Limited (NSE:WYETH) and Elan Corporation, plc (NYSE:ELN). Cohen has not yet been charged in this case, and prosecutors have not yet said if they believe he knew that Martoma’s advice was based on insider information. At this point they may not have enough evidence to charge Steve Cohen himself.
Cohen’s hedge fund has been battling rumors for years that it frequently violates securities laws through insider trading.