Dec 7 A former SAC Capital Advisors trader, set
to go on trial next month on insider trading charges, wants to
cite in court some 2012 testimony given by the hedge fund's
founder Steven Cohen, claiming it rebuts the government's case.
Mathew Martoma, the ex-SAC portfolio manager is scheduled
for trial on Jan. 6. He filed court papers late Friday seeking
to use testimony given by Cohen to the U.S. Securities and
Exchange Commission in May 2012.
Martoma contends the testimony will show he had nothing to
do with decisions to trade in Elan Corp and Wyeth in 2008.
Filed in U.S. District Court in New York, the Martoma
documents showed how extensively investigators questioned Cohen
about the trading at the center of the case against Martoma, who
was charged in November 2012 with insider trading in what is
said to be the most lucrative such U.S. scheme ever.
Prosecutors contend Martoma got nonpublic information from a
physician about a clinical trial of an Alzheimer's drug, and
then used that information to help CR Intrinsic Investors, an
SAC division, avoid $276 million in losses through the sale of
securities for Elan and Wyeth, now owned by Pfizer Inc.
Martoma's case will go before a jury not long after the
expected conclusion of a trial in New York of another SAC
portfolio manager, Michael Steinberg. He is accused of trading
in Dell Inc and Nvidia Corp, based on inside
Once a $14 billion hedge fund, SAC Capital agreed last month
to pay $1.2 billion and plead guilty to fraud charges as part of
the insider trading probe. Cohen, who has not been criminally
charged, faces an SEC administrative action accusing him of
failing to supervise Martoma and Steinberg and prevent insider
WAVE OF PRE-TRIAL MOTIONS
The excerpts of Cohen's testimony came in a wave of
pre-trial motions by Martoma's lawyers on Friday night, seeking
to limit what is presented at trial. Martoma wants to exclude
evidence about SAC's sale of Wyeth stock and about the way the
hedge fund sold Elan and Wyeth securities.
Alternatively, Martoma's lawyers are seeking to introduce
Cohen's SEC testimony at trial. Cohen is expected to assert his
constitutional rights and not be available to testify at trial,
Martoma's lawyers said.
Jonathan Gasthalter, a spokesman for SAC, did not
immediately respond to a request for comment on Saturday.
In his testimony, Cohen told SEC investigators that he made
the decision to sell Wyeth securities after consulting with
Wayne Holman, a former SAC trader who went on to establish his
own hedge fund, Ridgeback Capital Management.
Cohen testified that he had considered Holman "a great
healthcare investor recommendations are very important
to me." Holman had a $20 million consulting deal with SAC that
Cohen said he approved because "he's worth it."
Martoma's lawyers contend the testimony makes clear that
Holman, rather than their client, was the reason Cohen decided
to sell SAC's Wyeth position in 2008. The week of the trade,
Cohen said he spoke with Holman "at some point and he was
telling me he was selling his Wyeth."
A lawyer for Holman did not immediately respond to a request
for comment on Saturday.
ELAN AND WYETH
In the court filings, Martoma's lawyers also contend that
Cohen's testimony clearly establishes that Martoma had nothing
to do with the actual trading strategies used by SAC in trading
Wyeth and Elan. In his testimony, Cohen said he had decided to
short Elan to hedge SAC's long exposure in Wyeth.
"Generally, what I remember was selling Wyeth and then
deciding to hedge out my exposure in Wyeth by shorting Elan,"
Cohen testified. "It was sort of imperfect. I was estimating the
ratio that I would need to sell one against the other, but
that's what I did."
The case is U.S. v. Martoma, U.S. District Court, Southern
District of New York, No. 12-00973.