January 23, 2014 / 1:00 AM / in 4 years

Witness in trial of SAC's Martoma cites 'holes' in memory

NEW YORK, Jan 22 (Reuters) - An octogenarian doctor who is the government’s star witness in the insider trading trial of Mathew Martoma said Wednesday he did not remember details of a key meeting with the SAC Capital Advisors trader until two weeks ago.

Sidney Gilman, 81, said that when investigators first questioned him, he did not recall the 2008 meeting. “Ultimately” he recalled aspects of the meeting, he said, some as recently as two weeks ago.

“There still remains some holes in my memory, though,” Gilman said.

Gilman was testifying in the trial of Martoma, whom prosecutors accuse of using inside information about the trial of an Alzheimer’s drug to trade on the stocks of two drug companies.

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 trading. He has denied wrongdoing.

SAC Capital, headed by Steven A. Cohen, has agreed to pay $1.8 billion in criminal and civil settlements and plead guilty to fraud charges stemming from insider trading by its employees.

Central to the case against Martoma, 39, is the extent to which Gilman gave him the final results of the drug trial before he presented them publicly on July 29, 2008.

Earlier in the trial, Gilman had said he told Martoma the results over the phone on July 17. But during his testimony Wednesday, he said Martoma later visited him in his office in Ann Arbor, Michigan, to review a draft slide presentation about the results.

“I showed him the slide set that was then current,” Gilman told Arlo Devlin-Brown, the lead prosecutor.

Under questioning by Devlin-Brown, Gilman said he had not recalled the meeting at first, but said his memory had evolved since first being asked about the meeting.

Later on Wednesday, Martoma’s lawyer, Richard Strassberg, focused on the extent Gilman discussed the trial results with others, including findings that the drug could cause a patient’s brain to swell.

Gilman confirmed that after April 2006, patients who were enrolled in the study were told on a non-confidential basis of the possibility of developing the side effect.

Strassberg also showed jurors an email from Dec. 31, 2006, in which Gilman discussed the trial with an ABC news reporter, saying the “therapy is being tolerated despite some adverse events among some of the subjects.”

Strassberg was to continue his cross-examination of Gilman, who is testifying under a non-prosecution agreement, on Thursday.

Earlier Wednesday, Gilman also told prosecutors that the last time he saw Martoma was July 30, during a lunch arranged through Gerson Lehrman Group, the consulting firm that arranged for all of their paid consultations.

At the lunch, Gilman said Martoma asked him if he had heard about Elan’s stock dropping after the drug trial results were presented, a fact Gilman said he didn’t know

“Well, it dropped like a rock,” Martoma said, according to Gilman.

Martoma “didn’t seem surprised,” Gilman added. After that, Gilman said he didn’t see Martoma again, a circumstance that surprised him.

“Well, I thought we were friends, and I thought he’d be in touch just to say hello,” he said.

The case is U.S. v. Martoma, U.S. District Court, Southern District of New York, 12-cr-00973.

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