Sidney Gilman, the 81-year-old former University of Michigan neurologist who claims he passed tips about clinical tests of an Alzheimer’s drug to SAC Capital Advisors LP fund manager Mathew Martoma, said he has “holes” in his memory of a key meeting.
Gilman, testifying for a third day in Martoma’s insider trading trial, told jurors that he only recently remembered many details of a July 19, 2008, meeting during which the two men reviewed results of testing on the drug, bapineuzumab, 10 days before they were to be released publicly.
When originally asked about the meeting during the government’s investigation of Martoma, Gilman testified, he didn’t remember it.
“About two weeks ago I recalled what I related today,” Gilman testified near the end of his questioning by Assistant U.S. Attorney Arlo Devlin-Brown yesterday in federal court in Manhattan. “There still remains some holes in my memory, though.”
Martoma, who’s charged with conspiracy and securities fraud, is being tried for what the government claims is the most lucrative insider-trading scheme in history. Prosecutors claim SAC sold a $700 million position in Elan and Wyeth the week before the bapineuzumab results caused shares of the companies to drop. Martoma, who denies wrongdoing, faces as long as 20 years in prison if convicted of securities fraud.
SAC portfolio manager Michael Steinberg was convicted on Dec. 18 of insider trading. In November, Stamford, Connecticut-based SAC agreed to plead guilty to securities fraud and end its investment advisory business as part of a record $1.8 billion settlement of the government’s investigation of insider trading at the firm. The agreement must be approved by a judge before it can take effect.
Gilman’s disclosure came after he told jurors about meeting Martoma in his Ann Arbor office on July 19, 2008, a Saturday. He said he remembered letting Martoma in, asking if he wanted lunch or something to drink.
Gilman said that Martoma asked to see a set of draft slides showing results of the clinical trial, which the physician was to present July 29 at a medical conference in Chicago. Gilman told jurors he answered Martoma’s questions about the test results. At the end of the meeting, Gilman said, he remembered walking outside with Martoma to a waiting car.
The doctor also testified that he sent a file of the presentation slides to Martoma and gave him the password to open it. Gilman testified he was “reasonably confident, but not certain” that he’d sent the material before it had been made public.
Gilman told jurors the last time he saw Martoma, before identifying him in the trial, was at lunch on July 30, 2008, the day after the bapineuzumab results were presented.
“The first thing he said to me is, ‘Did you hear about what happened to Elan stock?’ And I said ‘No, that’s not what I do, not what I usually attend to.’ And he said ‘Well it dropped like a rock,’ or something like that.”
After the lunch, Gilman testified, he was surprised that he didn’t hear from Martoma for at least two months.
“I thought we were friends,” Gilman told jurors. “And I thought he would be in touch, just to say hello.”
Devlin-Brown concluded his direct questioning of Gilman yesterday. Martoma’s lawyer, Richard Strassberg, cross-examined Gilman, suggesting that much of the information the doctor said he had given Martoma, including details of drug-test subjects who developed a brain-swelling side effect called “vasogenic edema,” had already been made public.
Juror No. 4
The trial started late yesterday after Juror No. 4, a 25-year-old woman from the Bronx, failed to arrive at the downtown Manhattan courthouse by 10:30 a.m. At a conference with lawyers outside the hearing of spectators, U.S. District Judge Paul Gardephe said the juror had been “chronically late” throughout the trial, according to a transcript.
“Yesterday it did appear to me, as I said, that she was not paying attention,” Gardephe told the lawyers. “What I mean by that is it appeared to me that she was asleep during parts, significant parts, of Dr. Gilman’s testimony.”
Gardephe dismissed the juror. Her spot will be occupied by one of four alternate jurors selected for the case.
The case is U.S. v. Martoma, 12-cr-00973, U.S. District Court, Southern District of New York (Manhattan).