Former SAC Capital Advisors portfolio manager charged in record insider scheme
By Bloomberg | November 20, 2012 12:04 pm
Mathew Martoma, a former portfolio manager at SAC Capital Advisors, was charged in what U.S. prosecutors called “the most lucrative insider-trading scheme ever,” netting as much as $276 million while at the hedge fund.
Prosecutors in the office of U.S. Attorney Preet Bharara in New York on Tuesday unsealed a complaint charging Mr. Martoma with trading on illicit tips about Alzheimer’s disease drug-trial results from 2006 to 2008.
Mr. Martoma is accused of arranging trades in shares of Wyeth LLC and Elan Corp., making $220 million in profits and avoiding $56 million in losses for an unnamed hedge fund. He is charged with one count of conspiracy and two counts of securities fraud.
Mr. Martoma allegedly engaged in the misconduct while working at for CR Intrinsic Investors, a unit of SAC Capital, according to a civil complaint lawsuit filed against him by the SEC.
The SEC sued Mr. Martoma, CR Intrinsic and Sidney Gilman, the neurologist who allegedly supplied the tips. A phone call to Mr. Gilman’s home in Ann Arbor, Mich., wasn’t immediately returned.
“This is an insider trading case where affiliated investment advisers and their hedge funds made over $276 million in illegal profits or avoided losses in July 2008 by trading ahead of a negative public announcement involving the clinical trial results for an Alzheimer’s drug being jointly developed by Elan Corp. and Wyeth,” according to the SEC complaint.
Prosecutors said Mr. Martoma, who was a portfolio manager specializing in health care, was paid a bonus of $9.4 million in January 2009, based largely on the hedge fund’s profits from the Wyeth and Elan trades.
Jonathan Gasthalter, a spokesman for Stamford-based SAC, had no immediate comment.