The sentencing of former SAC Capital Advisors LP hedge fund manager Mathew Martoma, who faces what may be the longest insider trading prison-term in history, will be delayed following a defense request for additional time, a court clerk said.
Martoma, 40, was convicted in February in what prosecutors have called the biggest insider trading scheme ever by an individual. He could face almost 20 years in prison for trading on illegal tips about an Alzheimer’s drug made by Elan Corp. and Wyeth LLC that gained SAC $276 million and earned him a $9.3 million bonus.
Martoma’s lawyers requested in a letter to U.S. District Judge Paul Gardephe last week that the June 10 sentencing be postponed for more than a month, citing a late report by the court’s Probation Department. The department said sentencing guidelines call for Martoma to receive between 15.7 years and 19.6 years in prison, according to a court filing by Martoma. Federal prosecutors in the office of Manhattan U.S. Attorney Preet Bharara agreed to the delay, but want it rescheduled for later this month.
Before trial, Martoma rebuffed government requests that he cooperate against SAC Capital founder Steven A. Cohen. After a conviction, or even sentencing, prosecutors may seek leniency for a defendant who cooperates in its probe of others.
Richard Strassberg, a lawyer for Martoma, and Jim Margolin, a spokesman for Bharara, declined to comment on whether a cooperation deal is being discussed.
Cohen hasn’t been charged with a crime. The Securities and Exchange Commission filed an administrative action claiming he failed to properly supervise hedge fund employees who carried out insider trades, including Martoma and former hedge fund manager Michael Steinberg.
SAC Capital, which has since changed its name, pleaded guilty last year and agreed to pay $1.8 billion for insider trading and creating what prosecutors called a culture of criminality. Steinberg was sentenced to 3 ½ years in prison earlier this year.
The SEC proceeding against Cohen was delayed at the request of federal prosecutors in New York while the Martoma case and appeals of other related cases are resolved.
Martoma argues federal sentencing guidelines require a term of between 5 and 6 1/2 years. He claims he’s responsible only for the bonus he received, not the entire gain by SAC.
During Martoma’s trial, the prosecution’s key witness told jurors about his first contact with agents of the Federal Bureau of Investigation who were investigating Martoma.
“I am only a grain of sand, as is Mr. Martoma,” Sidney Gilman, the man who tipped Martoma, testified the FBI agents told him. “They are really after a man named Steven A. Cohen.”
The case is U.S. v. Martoma, 12-cr-00973, U.S. District Court, Southern District of New York (Manhattan).