Ex-SAC Manager Martoma Loses Bid to Delay Insider TrialPatricia Hurtado and Bob Van Voris
Ex-SAC Capital Advisors LP fund manager Mathew Martoma lost a request to have his insider-trading trial postponed after his lawyers said they received “newly discovered” e-mails and other documents from the U.S.
Martoma’s attorney, Richard Strassberg, last week asked for a two-week delay in Martoma’s Jan. 6 trial, in a letter to U.S. District Judge Paul Gardephe in Manhattan. Defense lawyers said they needed the time to analyze 114,757 pages of new documents and prepare witnesses.
“Certain of these materials appear directly relevant to specific allegations made against Mr. Martoma,” Strassberg said in his letter.
Gardephe denied the request with a two-sentence endorsement on Strassberg’s letter: “The application is denied. The clerk will remove the motion.”
Martoma will be the second SAC employee to face insider-trading charges in Manhattan federal court in the next three months. Michael Steinberg, another SAC money manager, is to go on trial tomorrow in Manhattan. Steinberg, who worked at SAC’s Sigma Capital Management unit, is charged with trading on insider tips he got from Jon Horvath, an SAC technology analyst convicted of aiding an insider-trading scheme.
“The documents -- which were restored from newly discovered SAC backup tapes created in 2007 and 2008 -- consist primarily of e-mails sent to or received from Mr. Martoma’s analyst, Mr. Martoma’s trader and SAC health-care portfolio managers,” Strassberg said in his letter to the court.
Strassberg earlier obtained a two-month postponement of the Martoma trial so he could work on a trial in another case, a mortgage-fraud suit in which the lawyer represents Bank of America Corp.’s Countrywide unit.
Lou Colasuonno, a spokesman for Martoma, didn’t immediately reply to a voice-mail message left at his office seeking comment on the ruling.
SAC pleaded guilty Nov. 8 to securities fraud as part of a record $1.8 billion settlement of the government’s investigation into insider trading at the firm.
The Stamford, Connecticut-based hedge fund company agreed to close its investment advisory business as part of the accord. The settlement, if accepted by the judge, will end both its prosecution and a money-laundering lawsuit filed by the Justice Department.
Martoma, who has pleaded not guilty, is charged with using inside information on clinical trials of an Alzheimer’s disease drug to trade in shares of Elan Corp. and Wyeth. Prosecutors claim the illegal trading gave SAC a benefit of $276 million in profit and avoided losses.
If convicted, Martoma faces as long as 20 years in prison on each of two securities-fraud charges and five years for a single conspiracy charge.
Prosecutors claim Martoma got improper information on trials of bapineuzumab from two doctors involved in drug trials in 2008.
After Martoma learned that Elan and Wyeth would report negative data from the trials, he had a 20-minute telephone call with SAC founder Steven Cohen, according to the government. The hedge fund owner sold almost all of the fund’s $700 million position in the stocks and then sold them short.
Cohen hasn’t been charged. SAC’s settlement with the government doesn’t bar prosecutors from bringing charges against him or other individuals at SAC.
The case is U.S. v. Martoma, 12-cr-00973, and the Steinberg case is U.S. v. Steinberg, 12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).