United States v. Martoma

Criminal Practice

, New York Law Journal


Judge Paul Gardephe

A criminal complaint—and subsequent grand jury indictment—charged Martoma with conspiracy and substantive counts of securities fraud. From 2006 through July 2008 Martoma directed trading activity for his hedge fund employer on the basis of material, private information supplied by a doctor—a cooperating witness—on an Alzheimer's medication. Only partly granting Martoma a bill of particulars, district court ordered his alleged coconspirators to be identified. Otherwise, the government provided Martoma with enough information about his alleged receipt of, and trades on, insider information. Citing United States v. Rajaratnam, the court found the government provided Martoma sufficiently detailed information about his trading activity as to the indictment's two substantive counts, and need not provide such detail with respect to the conspiracy count. The government provided numerous specific details about the information Martoma obtained about the medication's clinical trial. It also made clear that it would focus on a July 17, 2008, telephone call during which Martoma and the doctor discussed the clinical trial's negative final results and a confidential 24-slide PowerPoint presentation the doctor received from Elan.

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