Action profited his firm SAC Capital Advisors around $275 million.
By Deepak Chitnis
WASHINGTON, DC: Former SAC Capitol Advisors portfolio manager Mathew Martoma was convicted for his part in a massive insider trading scheme that prosecutors called the biggest ever in the history of the US.
The conviction makes Martoma, 39, the eighth ex-employee of SAC to be convicted of insider trading. During his time at the hedge fund giant, which is managed by billionaire Steven A. Cohen, Martoma engaged in insider trading which estimates say illicitly profited the company as much as $275 million.
Martoma was expressionless as the verdict was read out in New York City, while his wife, Rosemary, burst into tears. Both husband and wife exited the courtroom together, joining Martoma’s defense team in a black SUV without speaking at all to reporters. Martoma’s lawyer, Richard Strassberg, did say that his client plans to appeal the verdict.
The conviction means that Martoma is now facing a maximum of 45 years in prison, which is almost four time the harshest insider trading sentence that US courts have ever given out – 12 years. He is expected to get from seven to 10 years in prison. At least a dozen of Martoma’s former co-workers reportedly testified against him in depositions with prosecutors, leading to a swift and decisive conviction.
The insider trading allegedly took place around July of 2008, during which time Martoma received information from doctors regarding the trial results of new drugs that were set to hit the market. Martoma left SAC in 2010, and was arrested in 2011 at his home in Boca Raton, Florida, where he famously fainted at the sight of law enforcement officers – an incident that prosecutors wanted to use as proof of Martoma’s guilt, but which the judge ruling over his case dismissed.
Martoma was offered the chance to cut a deal with prosecutors by assisting them in their investigation of Cohen and SAC, in exchange for a reduced sentence and other penalties, but he declined. Martoma, who has three children, has maintained his innocence throughout legal proceedings.
For its part, SAC agreed to pay $1.8 billion in civil and criminal settlements last year, and plead guilty to charges of fraud. Cohen is facing an investigation from the US Securities and Exchange Commission (SEC) to bar him from the financial industry for the rest of his life.