After N.Y. Court Appearance, Former Portfolio Manager Is Released on Bail
A former hedge fund portfolio manager accused of enabling a quarter of a billion dollars in profits by passing along inside information in one of the largest insider trading fraud cases in history appeared in a Manhattan court for the first time yesterday and was released on $5 million bail, though his movements were restricted.
Mathew Martoma, 38, of Boca Raton, Fla., was read his rights by Southern District Magistrate Judge James Cott (See Profile), who agreed to impose a bail package that prosecutors and Martoma's lawyers had worked out after his initial court appearance in Florida last week.
Martoma, who had been free on $5 million bail in Florida as well, must post $2 million in cash or property by next week to satisfy the new bail requirements, which will limit his travel to New York, New Jersey, Florida and Massachusetts.
Martoma was arrested last week on charges that between 2006 and 2008 he helped to engineer one of the largest insider trading frauds in history. He worked with CR Intrinsic Investors, an affiliate of SAC Capital Advisors. SAC is owned by Steven A. Cohen, one of the world's richest men.
Martoma's court appearance lasted only 12 minutes and he was not required to enter a plea, since an indictment has not been returned. Before the hearing, he sat in the spectator section with his wife and lawyers until his case was called.
Martoma's lawyer, Charles Stillman of Stillman & Friedman, provided a matter-of-fact analysis to a court hearing that was more process than substance.
"We took care of business today and we'll be back another day," Stillman said.
Afterward, Martoma could be seen walking down a courthouse hallway clasping hands with his wife. He left the courthouse after the couple both signed papers pledging that Martoma would follow the conditions of the bail package, which include surrendering any travel documents belonging to himself and his children.
Martoma was arrested on Nov. 20 in Florida. Prosecutors say he exploited an acquaintance with a medical school professor to get confidential, advance results from tests of an Alzheimer's disease drug.
They say he shared the information with others, enabling more than $276 million to be made illegally for his fund and others. The government said in court papers that he caused other investment advisers to buy shares in the drug companies, and then he and the others ditched their investments before the public found out about the drug trial's disappointing results, allowing them all to make big profits and avoid huge losses.