Prosecutor: Evidence proves ex-trader's guilt
NEW YORK (AP) — An "avalanche of evidence" points to the guilt of a former SAC Capital Advisors hedge fund portfolio manager charged with using inside information to earn his company over a quarter of a billion dollars, a prosecutor told a jury Monday.
But a defense lawyer faulted the government's case for relying on the testimony of a doctor involved in the testing of a promising Alzheimer's drug who "cannot be believed."
Assistant U.S. Attorney Eugene Ingoglia said the evidence presented in U.S. District Court in Manhattan against Mathew Martoma of Boca Raton, Fla., showed "insider trading pure and simple."
"What you have seen and heard is an avalanche of evidence that shows beyond a doubt that Martoma secretly arranged with others to get secret information from doctors," Ingoglia said.
He called Dr. Sidney Gilman a "canary in the coal mine" whose position as chairman of the safety committee for the drug trial allowed Martoma to enthusiastically rally SAC Capital to buy millions of shares in the companies sponsoring the trial: drug makers Elan Corp. and Wyeth.
After learning the test results were going to disappoint Wall Street, Martoma teamed up with SAC Capital founder Steven A. Cohen and a handful of others to quietly dump the firm's large position over several days, even shorting shares to score additional profits ahead of the public announcement in late July 2008, the prosecutor said.
Learning the results nearly two weeks before the rest of the investment world enabled the firm to earn $275 million in combined profits and avoided losses, he said. The Stamford, Conn.-based company has pleaded guilty to fraud charges and agreed to pay $1.8 billion.
Defense attorney Richard Strassberg told the jury in his closing argument that "the prosecution's entire case rests solely on the testimony of Dr. Gilman, and his story cannot be believed."
He said the 81-year-old former professor of neurology at the University of Michigan Medical School had a faulty memory and was saying only what prosecutors wanted to hear to satisfy the terms of his nonprosecution agreement.
"Dr. Gilman can't keep his story straight because he can't tell you a story he remembers," Strassberg said before showing jurors snippets of Gilman's testimony to demonstrate inconsistencies.
Gilman testified during the trial that he told Martoma the secret results of the drug trial before they were announced publically. Prosecutors say Martoma earned $9.3 million in bonuses for the successful trades at SAC Capital.
Strassberg told the jury evidence shows Cohen was the real target of investigators and his client was a "grain of sand."
He blamed Martoma's arrest on "a rush to judgment and in that rush to judgment, Mathew has been wrongly accused."
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.
