Mathew Martoma’s former trader at SAC Capital Advisors LP testified that he came to work on July 29, 2008, thinking he and his boss might lose their jobs.
“I believed that we had incurred significant losses in our portfolio,” the former trader, Timothy Jandovitz, testified today in Martoma’s insider trading trial. Jandovitz, the first witness called by prosecutors, told jurors he believed that bad news about a clinical drug trial had lost the fund managed by Martoma “north of $100 million.”
“I was concerned about the security of my boss’s job and my job as well,” Jandovitz told the jury in federal court in Manhattan. “Normally Steve Cohen doesn’t like it when you lose him money,” he said, referring to SAC’s owner.
What Jandovitz didn’t know was that SAC had quietly liquidated a $700 million position in shares of Wyeth and Elan Corp. the week before the announcement, prosecutors claim.
Later, Martoma told him that Cohen had directed Martoma not to tell him about their decision to sell the stock, Jandovitz said.
“Were you offended by that?” Assistant U.S. Attorney Arlo Devlin-Brown asked him.
“Slightly, yes,” Jandovitz answered.
Prosecutors allege that Martoma used inside information from two doctors supervising the drug trial to allow SAC to sell off its position before the bad news was announced publicly. The firm made $276 million in illegal profits and losses avoided, according to the government.
If convicted, Martoma faces 20 years in prison on the securities fraud counts.
The case is U.S. v. Martoma, 12-cr-00973, U.S. District Court, Southern District of New York (Manhattan).
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org