By Nate Raymond
NEW YORK Jan 23 An FBI agent who was
investigating SAC Capital Advisors portfolio manager Mathew
Martoma in 2011 said the trader was just a "grain of sand" in a
wider probe targeting the hedge fund's founder, Steven A. Cohen,
a government witness said on Thursday.
Sidney Gilman, a doctor testifying in Martoma's insider
trading trial in federal court in New York, recounted to jurors
how the U.S. Federal Bureau of Investigation agent approached
him in September 2011.
"The gentleman also mentioned (that) I am only a grain of
sand, as is Mr. Martoma," he said. "They are really after a man
named Steven A. Cohen."
While it has long been known that investigators targeted
Cohen, he has not been charged criminally in the probe. He has
denied wrongdoing and a spokesman declined to comment on
Martoma, a former portfolio manager in SAC's CR Intrinsic
Investors division, is one of eight current or former employees
of SAC Capital Advisors to face criminal charges for insider
Prosecutors accuse Martoma of using inside information
obtained from Gilman, who chaired the safety monitoring
committee for the Alzheimer's drug trial, to trade in Elan Corp
Plc and Wyeth, now a unit of Pfizer Inc.
Although he is not a defendant, Cohen's presence has loomed
over Martoma's trial. Prosecutors say that after learning about
negative results of a clinical trial for an Alzheimer's drug
from in 2008, Martoma called Cohen.
After the call, SAC began selling off its $700 million
position in the two companies, helping it make profits and avoid
losses of $276 million, prosecutors say.
SAC Capital last year agreed to pay $1.8 billion in criminal
and civil settlements and plead guilty to fraud charges stemming
from insider trading by its employees.
The U.S. Securities and Exchange Commission is seeking to
bar Cohen from the financial industry for failing to supervise
Martoma and another SAC employee.
Gilman, 81, who is testifying as a government witness under
a non-prosecution agreement, gave his account during
cross-examination on Thursday by a lawyer for Martoma.
The lawyer, Richard Strassberg, sought to contrast the
doctor's testimony that he leaked information to Martoma, to
earlier denials Gilman had made in meetings with government
investigators, including FBI agent B.J. Kang, in September 2011.
Gilman said he lied to the FBI agent who first approached
him in 2011 and later denied giving Martoma nonpublic
information during a meeting with investigators in February
Strassberg also asked Gilman about the non-prosecution
agreement he had received in exchange for his testimony, asking
if he had been afraid he would face a "long time in prison" if
"No, it wasn't terrifying to me," Gilman said.
Defense lawyers also showed the jury documents indicating
that Gilman spoke about the drug with people at other investment
firms, including Citadel Investment Group, Maverick Capital, and
Highside Capital Management.
Gilman said he did not recall many of the discussions,
allowing the defense lawyers to raise questions about how he
could remember details of meetings with Martoma but not details
of other investors.
None of the investors mentioned during Thursday's
questioning have been accused of wrongdoing. Representatives of
Citadel, Maverick and Highside did not immediately respond to
requests for comment.
The case is U.S. v. Martoma, U.S. District Court, Southern
District of New York, 12-cr-00973.