By Emily Flitter
NEW YORK Aug 22 U.S. prosecutors on Thursday
restated their case against a former portfolio manager who
worked for Steven A. Cohen's hedge fund SAC Capital Advisors,
adding a new twist to what is considered to be the centerpiece
of the multi-pronged legal action against SAC, court papers
Prosecutors filed a revised indictment in the insider
trading case against Mathew Martoma the former SAC employee. In
it, they restated their basic case against Martoma while adding
new details, including information about a second doctor who
allegedly gave him inside information.
They also portrayed Martoma's interactions with doctors
introduced to him by expert networking firms as a methodical
hunt for sources of inside information.
Martoma's lawyer Richard Strassberg did not immediately
respond to a request for comment.
Martoma was charged last November with insider trading in
shares of the drug companies Elan and Wyeth, which is
now a part of Pfizer. The two companies were working
together on a trial for a new drug to treat Alzheimer's Disease.
Prosecutors initially alleged one doctor, identified in a
corresponding case brought by the U.S. Securities and Exchange
Commission as the neurologist Sidney Gilman, formed a close
relationship with Martoma and shared with him non-public
information he obtained while supervising part of the trial.
Gilman is cooperating with prosecutors and agreed to pay a
The new charging document expands the characterization of
Martoma's actions, claiming he not only received and used
Gilman's information but also actively sought other insider
sources and found at least one more.
Thursday's court filing said the second doctor, described as
"a co-conspirator," met with Martoma for paid consultations
arranged through an expert networking firm and provided
non-public information "with the expectation that Martoma would
assist (the doctor) in obtaining additional clinical trial
The filing did not name the second doctor or the expert
networking firm through which Martoma met him. The firm that
connected Martoma and Gilman was Gerson Lehrman Group.
The filing described GLG as an "expert networking firm,"
while it described the firm that introduced Martoma to the
second doctor as "a financial services firm that provided expert
networking services to the SAC hedge fund."
GLG spokesman Loren Riegelhaupt declined to comment.
Other details in the new charging document expand on
Martoma's alleged attempts to find inside information.
According to the new charging document, Martoma emailed an
expert networking firm a list of 20 doctors who were serving as
investigators in the Alzheimer's drug trial and asked for
consultations with them. An employee of the expert network firm
replied that of the nine doctors who responded to the firm's
query, all had declined to speak with Martoma, citing a
"conflict of interest."
The charges also describe a trip Martoma took to see Gilman
in his Ann Arbor, Michigan office at the University of Michigan,
where Gilman was a professor. Martoma flew to meet Gilman on a
Saturday in July 2008, days before a scheduled public
announcement about the drug trial.
On Sunday, Martoma called SAC Capital's founder, who appears
as "SAC Owner" in the new charging document but has previously
been identified as Steven A. Cohen by sources familiar with the
case. On Monday, SAC began selling "virtually all of its
approximately $700 million worth of Elan and Wyeth stock prior
to the public announcement," the charges said.
Although the sale began on Monday, it's not clear exactly
which day it was completed.
The case is U.S. v. Martoma, U.S. District Court, Southern
District of New York, No. 12-cr-00973.