Ex-SAC Fund Manager Said to Get More Secrets From Doctors

Former SAC Capital Advisors LP fund manager Mathew Martoma got secret information about tests of several drugs from two physicians set to testify against him next month in his insider-trading trial, U.S. prosecutors said.

The government is seeking to introduce confidential information shared by the doctors, Sidney Gilman and Joel Ross, in addition to the illegal inside tips Martoma allegedly used to benefit SAC by $276 million in profits and avoided losses.

Prosecutors claim Gilman and Ross shared data about drugs in addition to the Alzheimer’s Disease drug bapineuzumab, which, they claim, Martoma used to trade illegally in shares of Elan Corp. and Wyeth.

The new information isn’t included in the charges against Martoma. Prosecutors are seeking to use it as “relevant, direct evidence of the background and nature of the relationship between Martoma and Gilman, and Martoma and Ross, the two co-conspirators with whom Martoma committed his crimes,” they said today in a filing in federal court in Manhattan.

Martoma has pleaded not guilty. If convicted, he faces as long as 20 years in prison on each of two securities-fraud counts and five years for a single conspiracy charge.

Gilman, a former University of Michigan neurologist, signed a non-prosecution agreement and is cooperating with the government.

Gilman’s Testimony

“Dr. Gilman is going to testify completely, fully and truthfully pursuant to his agreement,” his lawyer, Marc Mukasey, said today in a phone interview.

Ross, the founder of the Memory Enhancement Center in Eatontown, New Jersey, didn’t immediately respond to a message left after business hours with his answering service.

Martoma’s attorney, Richard Strassberg, declined to comment on the filing.

Martoma’s Jan. 11 trial will follow that of another SAC money manager, Michael Steinberg, who’s currently being tried in Manhattan federal court on charges he traded on insider tips from an SAC technology analyst.

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.

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).

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