Martoma Inside-Trading Conviction Should Stand, U.S. Says

Former SAC Capital Advisors LP fund manager Mathew Martoma’s securities fraud convictions should stand and he shouldn’t get a new trial for the most lucrative insider-trading scheme ever, U.S. prosecutors said.

Martoma, found guilty Feb. 6 by a federal court jury in Manhattan, is seeking to overturn his convictions on grounds the government didn’t prove he traded on nonpublic information or had the required criminal intent. He also questioned the credibility of a key government witness and said media accounts of his expulsion from Harvard Law School may have biased the jury.

Prosecutors said there was overwhelming evidence presented at trial that he had inside information, particularly his receipt of the final efficacy results of a trial for an Alzheimer’s disease drug from Sidney Gilman, a former University of Michigan neurologist who was the government’s star witness, according to a filing today with U.S. District Judge Paul Gardephe, who presided over the trial.

Martoma’s claims that the jury was biased by his Harvard dismissal is contradicted by the trial record which showed that all jurors said they heeded warnings not to read media coverage of the trial, according to the government. Those warnings came before the information about Harvard appeared in the press, prosecutors said. There’s no reason for the judge to assume jurors lied about their promise, Assistant U.S. Attorney Arlo Devlin-Brown said in the filing.

Jurors found that Martoma, 39, used secret tips on clinical trials of the Alzheimer’s disease drug to trade Wyeth and Elan Corp. shares. In doing so, he reaped a $275 million benefit for the fund. Martoma chose to risk a trial after rejecting U.S. offers of a deal for cooperation. He faces as long as 20 years in prison on the most serious counts.

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

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