By Nate Raymond
NEW YORK Feb 4 A jury began deliberating on
Tuesday on whether to convict Mathew Martoma of insider trading
stemming from trades made while working at Steven A. Cohen's SAC
Capital Advisors hedge fund, in what prosecutors called the most
lucrative such scheme in U.S. history.
U.S. District Judge Paul Gardephe in Manhattan spent the
morning instructing the seven women and five men on the jury
before they began their deliberations.
The jurors, who will resume deliberations Wednesday morning,
include a bus driver, an employment lawyer and a film professor.
Jurors ended the day without a verdict after sending the
judge a single note with a question about an element prosecutors
must prove to establish insider trading. Deliberations will
resume Wednesday morning.
Prosecutors charged that from 2006 to 2008, Martoma sought
out confidential information from doctors involved in a clinical
trial for an Alzheimer's disease drug being developed by Elan
Corp Plc and Wyeth, now owned by Pfizer Inc.
Prosecutors said SAC Capital began selling off its $700
million position in Elan and Wyeth in July 2008, based on a tip
Martoma got from a doctor, Sidney Gilman, about negative trial
results for the drug that were not made public until later that
Thanks to the trades, SAC Capital made profits and avoided
losses of $275 million, prosecutors say.
Most of the trading took place in accounts controlled by
Cohen, who prosecutors say Martoma had a 20-minute phone call
with after receiving information about the negative results.
Martoma, 39, a former portfolio manager at SAC, denies
wrongdoing. His lawyer Richard Strassberg told jurors Monday
that prosecutors erred in charging his client "in their haste to
make a case against someone who is not even in this courtroom:
Mathew Martoma's boss, Steven Cohen."
Cohen, 57, has not been criminally charged. But the U.S.
Securities and Exchange Commission is seeking to bar Cohen from
the financial services industry for failing to supervise Martoma
and Michael Steinberg, another portfolio manager convicted in
December on insider trading charges. Cohen denies wrongdoing.
In total, prosecutors have charged eight current of former
employees at Cohen's hedge fund. 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
SAC Capital is scheduled to be sentenced March 14. It is
meanwhile in process of converting into a so-called family
office that will manage Cohen's estimated $9 billion fortune.
Jurors sent Gardephe a note related to an element of what
prosecutors must prove to establish Martoma engaged in insider
trading, namely the "personal benefit" received by an insider in
exchange for material non-public information.
Jurors asked if the benefit could include fees paid by
Gerson Lehrman Group. Prosecutors say that Gilman, 81, received
around $70,000 for his more than 40 paid consultations with
Martoma arranged through Gerson Lerhman, a firm that pairs
experts with investors.
Gilman, who chaired the safety monitoring committee for the
clinical drug trial, testified that he provided confidential
information to Martoma. The doctor testified pursuant to a
The case is U.S. v. Martoma, U.S. District Court, Southern
District of New York, No. 12-cr-00973.