A former SAC Capital Advisors portfolio manager was convicted Thursday of helping his company earn more than a quarter billion dollars illegally through trades based on secrets about the testing of a potential breakthrough Alzheimer’s drug.
The verdict capped a three-week trial that featured testimony from two prominent doctors who confessed spilling secrets to Mathew Martoma during lucrative consultations with financiers.
The trial contained frequent mentions of SAC Capital’s billionaire founder, Steven A. Cohen. Defense lawyer Richard Strassberg said in his closing argument Monday that Cohen was the real target of investigators. He said his client was victimized by the testimony of doctors who traded their credibility for plea deals that left them beholden to the government.
SAC Capital pleaded guilty in November to fraud charges and agreed to pay $1.8 billion to settle charges that it allowed, if not encouraged, insider trading for more than a decade.
Cohen has not been criminally charged, but the Securities and Exchange Commission has accused him in a civil action of failing to prevent insider trading at the company, which he founded in 1992 and bears his initials. Cohen has disputed the allegations.
The Southern District U.S. attorney’s office praised Thursday’s verdict, comparing Martoma’s actions to buying an answer sheet before an exam. “In the short run, cheating may have been profitable for Martoma, but in the end, it made him a convicted felon,” the statement said.
Martoma was the 79th person who has pleaded guilty or been convicted in U.S. Attorney Preet Bharara’s crackdown on insider trading. Strassberg said he would appeal.
There was no mention at trial of Martoma’s educational record at Harvard Law School, where he was expelled in 1999 after he used a forged transcript he claimed he created to impress his parents to apply for a clerkship with as many as 23 federal appeals judges.