Evidence against Mathew Martoma, the former SAC Capital Advisors LP portfolio manager charged with insider trading, includes e-mails from SAC and third parties and trading records, federal prosecutors said.
The U.S. also said in a filing in Manhattan federal court yesterday that it will disclose the identities of Martoma’s co-conspirators in the alleged scheme, which prosecutors called the biggest ever, no later than July 31. The government has claimed Martoma shared inside tips on a drug trial with SAC founder Steven A. Cohen, who hasn’t been charged or sued in the matter.
The disclosures came in the government’s response to Martoma’s request for a bill of particulars that would provide further detail on the charges against him. The government said its case, in which Martoma is charged with using the inside information to help SAC make $276 million in illegal profit and losses avoided on shares of Elan Corp. and Wyeth LLC, is easily understood.
“This is a one defendant case, involving trades in two securities, both relating to the outcome of a single event: the public announcement of the drug trial results on July 29, 2008,” Assistant U.S. Attorney Arlo Devlin-Brown wrote in the papers filed yesterday.
Cohen, the founder of Stamford, Connecticut-based SAC, has denied any wrongdoing. Martoma has pleaded not guilty. Martoma’s lawyer, Richard Strassberg, declined to comment on the government’s filing.
Prosecutors claim Martoma got the illegal tips from a physician who was in charge of monitoring tests of bapineuzumab, or bapi, a drug to treat Alzheimer’s disease. After Martoma learned the companies would report negative data on the drug, he had a 20-minute phone call with Cohen.
SAC began liquidating its $700 million position in Elan and Wyeth the day after the phone call, according to prosecutors. SAC then took short positions in the stock, they claimed.
Last month, a judge conditionally approved SAC’s record $602 million settlement with the Securities and Exchange Commission, in which SAC neither admitted nor denied fault.
U.S. District Judge Victor Marrero in Manhattan ruled April 15 that the settlement can go forward, while saying it remains subject to a ruling by the U.S. Circuit Court of Appeals in New York in a case involving an earlier SEC settlement with Citigroup Inc.
The case is U.S. v. Martoma, 12-cr-00973, U.S. District Court, Southern District of New York (Manhattan).