Wednesday, June 5, 2013

White Collar: Trial Date Set in History's Largest Insider Trading Case

Mathew Martoma, former portfolio manager at SAC Capital Advisors is scheduled to begin trial on federal insider trading charges on November 4, 2013, in the United States District Court for the Southern District of New York.  The government alleges that Martoma either made or avoided losses totalling $276 million by trading on inside information in the shares of Elan and Wyeth pharmaceutical companies.
The two pharmaceutical giants were attempting to develop drugs for the treatment of Alzheimer's disease.  The government contends that Martoma received nonpublic information concerning negative results of clinical drug trials for the new medications.  Allegations are that Sidney Gilman, M.D., a professor of neurology tipped Martoma about the disappointing clinical trials.
According to the New York Times, the government has agreed to not prosecute Dr. Gilman in return for his testimony against Martoma.  Such arrangements are very rare as they raise significant questions about the credibility of the witness testifying under the grant of immunity.  Presumably, the government will present evidence, such as emails and telephone records, to corroborate Gilman's testimony implicating Martoma.
The maximum penalty for insider trading is 25 years in prison.  Under the advisory Federal Sentencing Guidelines the recommended sentence for Martoma would probably reach the statutory maximum of 25 years.
For more information, please see the article published by the New York Times,

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