Ex-Fund Manager Pleads Not Guilty to Insider Trading
A former hedge fund portfolio manager charged with carrying out a record-setting insider trading scheme pleaded not guilty to insider trading charges yesterday as the prosecution hinted that he would not be the last person arrested in the case. Mathew Martoma, 38, of Boca Raton, Fla., persuaded a medical professor to leak secret data from an Alzheimer's disease drug trial between 2006 and 2008 when Martoma did work for an expert consulting service in New York, prosecutors said. The government said inside information Martoma learned about the joint drug trial by pharmaceutical companies Elan Corp. and Wyeth enabled others to make $250 million illegally.
Martoma, who is accused of earning $9 million in bonuses for the year when the trades were made, pleaded not guilty before Southern District Judge Paul Gardephe (See Profile) to a single count of conspiracy and two counts of securities fraud.
Assistant U.S. Attorney Arlo Devlin-Brown said the U.S. would rely heavily at trial on trading and phone records as well as emails and other documents. He said most of the evidence would be turned over to the defense by mid-January, but he left open the possibility that other evidence will be produced later.
The arrest of Martoma has increased speculation that the government is taking a hard look at the practices of billionaire hedge fund owner Steven A. Cohen. Martoma worked for an affiliate of Cohen's Stamford, Conn.-based firm, SAC Capital Advisors.
Martoma is represented by Charles Stillman of Stillman & Friedman. Outside court yesterday Stillman said that the defense team wanted "to bring about a happy ending for Mr. Martoma and his family."
Martoma, the fourth person associated with SAC Capital to be arrested on insider trading charges in the past four years, is scheduled to return to court March 5.