(Recasts to add discussion of 2011 Rajaratnam case)
By Jonathan Stempel
NEW YORK May 28 A prison sentence approaching
20 years would be an appropriate punishment for Mathew Martoma,
a former SAC Capital Advisors LP fund manager convicted of
insider trading, U.S. court officials said, prompting his
lawyers to object strenuously.
In a court filing late Tuesday, lawyers for Martoma urged
U.S. District Judge Paul Gardephe in Manhattan to show leniency,
and impose a lesser sentence than the 11-year prison term given
to Galleon Group hedge fund founder Raj Rajaratnam for his 2011
insider trading conviction. A term of nearly 20 years would be
record for an insider trading conviction.
The filing also included more than 100 letters of support
for Martoma, of Boca Raton, Florida, who is married and has
three young children. SAC was founded and owned by billionaire
investor Steven A. Cohen.
Martoma faces sentencing on June 10 following his Feb. 6
fraud conviction for seeking and trading on confidential tips
about a clinical trial for an Alzheimer's drug.
Prosecutors said this enabled SAC to make about $275 million
in July 2008 from trades in Elan Corp and Wyeth, the nation's
largest insider trading scheme by dollar value.
According to Tuesday's filing, the probation department for
the Manhattan court deemed a prison term for Martoma of between
15 years, 8 months and 19 years, 7 months appropriate under
Martoma's lawyers, led by Richard Strassberg at Goodwin
Procter, called such a long term "outrageous" and "irrational."
They said Martoma's fraud "does not even begin to approach"
Rajaratnam's, which spanned several years and dozens of stocks
and co-conspirators - but totaled only $72 million.
Martoma's lawyers said their client should be sentenced only
for his $6.3 million of personal profit from his trades, for a
recommended prison term as short as 5-1/4 years. They also cited
similar cases in which sentences as short as two years were
The defendant's unlawful trading was "far narrower in many
important respects than the unlawful trading in nearly all other
recent insider trading cases," Strassberg wrote.
Judges may impose stiffer or lesser punishments than federal
guidelines call for. Prosecutors also need not follow probation
A spokeswoman for U.S. Attorney Preet Bharara in Manhattan
declined to comment.
The longest U.S. insider trading sentence is a 12-year term
given to lawyer Matthew Kluger for a $37 million scheme for
which he pleaded guilty in 2011. Rajaratnam is appealing his
conviction to the U.S. Supreme Court.
Martoma, who was born in 1974 to immigrant parents from
India, graduated from Duke University and Stanford University's
business school, and attended Harvard Law School before being
expelled after forging a transcript. His Stanford degree was
voided following his conviction.
Eight SAC employees have been convicted of or pleaded guilty
to insider trading charges. SAC pleaded guilty to fraud and
agreed to pay $1.8 billion in criminal and civil settlements.
Cohen has not been criminally charged. He has renamed his
Stamford, Connecticut-based firm Point72 Asset Management, and
shifted its focus to managing his fortune.
The case is U.S. v. Martoma, U.S. District Court, Southern
District of New York, No. 12-cr-00973.
(Reporting by Jonathan Stempel in New York; Editing by
Bernadette Baum, Sofina Mirza-Reid and)