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In SAC Case, Prosecutors Play Hardball With Former Manager

Mathew Martoma, a former portfolio manager with SAC Capital Advisors, exits federal court in New York on June 5
Mathew Martoma, a former portfolio manager with SAC Capital Advisors, exits federal court in New York on June 5Photograph by RLouis Lanzano/Bloomberg

Prosecutors in Manhattan on Thursday filed a revised indictment of Mathew Martoma, the former SAC Capital portfolio manager charged last November with illegal trading of two drug stocks in what was billed as the largest insider trading case in U.S. history. The Martoma case forms a critical leg of the criminal securities fraud charges that were recently filed against SAC, the Connecticut hedge fund founded by Steven Cohen. This fresh Martoma indictment had been anticipated for several weeks and contains a number of intriguing new details, but it also underscores the government’s awkward position in the SAC case.

Martoma has pleaded not guilty. Prosecutors badly need him to flip to help them build a case against Cohen, which has long been their goal. So far, however, Martoma has refused—even in the face of seemingly insurmountable evidence, if the charges are to be believed. This latest move suggests that prosecutors are going to keep coming down brutally hard on Martoma, a father of three, in the hopes that he changes his mind. His lawyer, Richard Strassberg at Goodwin Procter, didn’t respond to a request for comment.