New York Securities Lawyer Blog
On November 19, 2012, the Department of Justice filed criminal charges for insider trading against Mathew Martoma, the former portfolio manager of SAC Capital Advisors, a $14 billion hedge fund based in Stamford, Connecticut, in the District Court for the Southern District of New York. Specifically the pending counts against Mr. Martoma include: (1) Conspiracy to commit securities fraud; (2) manipulative and deceptive devices; and (3) conspiracy to defraud the United States through securities fraud. The complaint against Mr. Martoma remains sealed and the matter is pending before Judge Paul G. Gardephe.
On December 21, 2012, the Department of Justice filed an indictment against Mr. Martoma describing the insider trading case. Specifically, the indictment states, “From in or about 2006 through on or about July 29, 2008, MATHEW MARTOMA, the defendant, participated in an insider trading scheme centered around obtaining confidential data about the [phase II clinical trial of an experimental Alzheimer’s disease drug known as bapineuzumab] before it was made public, and then buying or selling stock in [Elan Corporation, plc] and [Wyeth] [partners in the clinical trial] depending in part on whether he viewed the data as positive or negative.” See Indictment, p. 3, ΒΆ 7. Reportedly, the insider trading scheme allowed SAC to earn profits and avoid losses totaling $276 million.
Martoma’s arraignment occurred on January 3, 2013, during which, Martoma pleaded not guilty to all counts of securities fraud and conspiracy. Although the trial in this matter has not yet been scheduled, Judge Gardephe will hold a hearing on March 5, 2013 regarding pre-trial discovery. To date, charges have not been filed against SAC. The Securities and Exchange Commission, however, has stated that it may file fraud charges against SAC based upon facts uncovered in Mr. Martoma’s criminal matter.
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