| NEW YORK
NEW YORK Jan 9 Years before he went on trial
for insider trading, former SAC Capital Advisors portfolio
manager Mathew Martoma faced disciplinary action while at
Harvard Law School, according to court records unsealed on
The court records do not reveal how Martoma was disciplined.
But a person familiar with the matter said he was expelled from
Harvard in 1999 for creating a false grades transcript.
A spokesman for Harvard, Robb London, said the school does
not comment on disciplinary proceedings, although he said it had
no record of Martoma graduating.
The revelations, which date back to 1999, came as government
and defense lawyers prepared to make their opening statements in
Martoma's high-profile insider trading trial on Friday.
Lou Colasuonno, a spokesman for Martoma, declined to
describe the event at Harvard, but said it occurred 15 years ago
and has no bearing on the case.
"Raising it now is a transparent effort by the government to
unduly influence the ongoing court proceedings," Colasuonno
Martoma, 39, is one of eight current or former SAC Capital
employees to face criminal insider trading charges.
He chose to go to trial rather than plead guilty and
cooperate with prosecutors, an option six others took. Another,
Michael Steinberg, was convicted on insider trading charges in
Prosecutors accuse Martoma of arranging trades in Elan Corp
and Wyeth based on nonpublic information he got from
two doctors involved in a clinical trial for an Alzheimer's
drug. Wyeth was later acquired by Pfizer Inc.
The trades enabled SAC Capital to make profits and avoid
losses of $276 million, a sum prosecutors say is a record in a
U.S. insider trading case.
SAC Capital pleaded guilty to fraud charges in November
stemming from employees' insider trading. The hedge fund has
agreed to pay $1.8 billion in criminal and civil settlements.
Steven A. Cohen, the founder of SAC Capital, has not been
criminally charged but faces an administrative action by the
U.S. Securities and Exchange Commission seeking to bar him from
the financial industry for failing to supervise Martoma and
Steinberg. He denies wrongdoing.
In court on Thursday, U.S. District Judge Paul Gardephe and
lawyers for both sides agreed on the seven women and five men
who will hear the case against Martoma. The jurors range in age
from 24 to 66 and include a film professor, a lawyer and a bus
The judge said opening statements would start Friday.
News of Martoma's Harvard troubles came to light in two
orders issued by Gardephe in which he said documents related to
a disciplinary proceeding against Martoma in 1999, while he was
a student at Harvard, should be unsealed.
Martoma's lawyers had fought all the way to the 2nd U.S.
Circuit Court of Appeals to keep the papers secret, arguing he
would suffer embarrassment and his right to a fair trial would
be violated. The 2nd Circuit denied his appeal Wednesday.
The documents were not immediately available. The 2nd
Circuit was expected to make them available Friday.
After leaving Harvard, Martoma went to Stanford University
where he earned an MBA.
The case is U.S. v. Martoma, U.S. District Court, Southern
District of New York, 12-cr-00973.