Matt Levine, Columnist

Martoma Prosecutors Bask in Victory Over a Grain of Sand

I'm old enough to remember when the options backdating scandal was a thing. Even then it seemed like a silly thing, and it has not improved with age.

February 6, 2014 at 10:17 PM UTC

By Matt Levine

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

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Mathew Martoma's lawyers did an impressive job with what they had to work with, but it's no surprise that their client was found guilty of insider trading today. A doctor testifies he gave you secret terrible drug trial results, your hedge fund sells hundreds of millions of dollars of stock, and a week later the results come out and the stock tanks: You go to jail. That is a simple bad story. There are a lot of very gray-area insider trading cases, including some in the recent batch of SAC-linked prosecutions, but Martoma's doesn't really seem to be one of them.

Nor, I think, does his conviction carry any Big Implications. Will he roll and give prosecutors Steve Cohen's head on a sandy platter? I've always been skeptical of that theory: If Martoma had information that could be used to go after Cohen, and any inclination to use it, the time to do so was before getting convicted of a bunch of felonies. Whatever reason Martoma had for not cooperating against Cohen last week, he probably still has now. And cooperating now is not exactly a freebie do-over. You still gotta go to jail! Like, a lot.