Martoma Wins Prison Delay to Seek Freedom During Appeal

Former SAC Capital Advisors LP portfolio manager Mathew Martoma won’t have to report to prison on Nov. 10 as an appeals panel considers whether he may remain free while seeking to overturn his insider-trading conviction.

Martoma, 40, was sentenced to nine years in prison after being found guilty of making $275 million for SAC by using illegal tips to trade in Elan Corp. and Wyeth LLC in what prosecutors called the biggest insider-trading case against an individual.

The U.S. Court of Appeals in New York yesterday postponed Martoma’s surrender date until it considers his emergency motion for bail during the appeal. The court hasn’t scheduled a hearing on that request.

Martoma claimed in a court filing that U.S. District Judge Paul Gardephe made errors during the trial by excluding testimony by SAC founder Steven A. Cohen about his own Elan and Wyeth trades. The judge also erred by barring testimony from an expert witness that Elan was overvalued in July 2008, he said.

At the trial, prosecutors said Stamford, Connecticut-based SAC Capital liquidated a $700 million position in Elan and Wyeth within days of Martoma learning inside information about negative clinical tests on the Alzheimer’s disease drug bapineuzumab. Martoma claimed the U.S. failed to prove that his source, a physician supervising the bapineuzumab testing, benefited from passing the tips.

Martoma, convicted in February, got the longest sentence of seven former SAC Capital analysts and fund managers convicted for trading on inside information. Gardephe last month denied Martoma’s bail request, expressing doubt his appeal will succeed.

“The evidence of Martoma’s guilt at trial was overwhelming,” Gardephe said in an Oct. 21 ruling. “None of Martoma’s arguments regarding the sufficiency of the evidence or legal error at trial are persuasive.”

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

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