Martoma, U.S. Reach Deal With University Over Laptop

Ex-SAC Capital Advisors LP portfolio manager Mathew Martoma and U.S. prosecutors reached an agreement with the University of Michigan giving them access to documents encrypted on a laptop belonging to the government’s star witness in Martoma’s insider trading case.

Martoma was charged by the U.S. in November with the largest insider trading case in history, accused of helping the hedge fund founded by Steven A. Cohen make $276 million using illegal tips about a drug to treat Alzheimer’s disease.

The U.S. Securities and Exchange Commission alleged that Martoma’s source was Sid Gilman, a University of Michigan neurologist who was head of the safety monitoring committee for the drug trial. Gilman has entered into a non-prosecution agreement and is cooperating with the government.

“We write with the consent of the government to inform the court that Mr. Martoma, the Unites States Attorney’s Office and the University of Michigan have reached an agreement concerning the production of electronic documents by the university,” Martoma’s lawyer, Richard Strassberg, said in a June 13 letter to U.S. District Judge Paul Gardephe in Manhattan made public today.

Strassberg said a June 18 hearing before Gardephe to discuss a dispute over lawyers’ access to a laptop used by Gilman is no longer necessary.

The government, which told Gardephe it had “imaged,” or copied, the contents of the computer’s hard drive, had not been able to gain access to the encoded files. Under the agreement, the government will give its copy to the university, which will decrypt the files and make them available to prosecutors and defense lawyers, Strassberg said.

Patient Records

Confidential records regarding patients and other information will be redacted and won’t be made public, Strassberg said.

Prosecutors had said they were preparing to serve a subpoena on the university after it initially refused to help them gain access to the laptop files, citing confidentiality concerns about the contents of the documents.

In his endorsed letter, Gardephe set an Aug. 23 conference to hear Martoma’s request to dismiss the charges against him. He is scheduled to go on trial Nov. 4 on conspiracy and securities fraud charges.

The case is U.S. v. Martoma, 12-cr-00973, U.S. District Court, Southern District of New York (Manhattan).

Before it's here, it's on the Bloomberg Terminal.