Fraudster faces up to 20 years in jail

Publish date: 2024-05-05

Former SAC Capital Advisors fund manager Mathew Martoma, centre, leaves court with his wife Rosemary Martoma and lawyers. Photo / AP

Former SAC Capital Advisors LP fund manager Mathew Martoma, who was found guilty in the most lucrative insider-trading scheme ever, is to be sentenced on June 10 and faces up to 20 years in prison.

Martoma, 39, was convicted on two counts of securities fraud, which carries a maximum 20-year term, and one count of conspiracy, which has a maximum five-year term. US District Judge Paul Gardephe may make each term concurrent and has latitude to impose a significantly shorter sentence.

The longest insider-trading term of 12 years was given to attorney Matthew Kluger in 2012 for a US$37 million ($44.5 million) scheme. The second-longest of 11 years was imposed upon Galleon Group LLC co-founder Raj Rajaratnam for a US$72 million scheme.

Martoma was found guilty of a US$275 million scheme. His was the seventh conviction tied to SAC Capital-related insider trading in the six-year probe of the hedge fund and its billionaire founder, Steven Cohen.

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Jurors in Manhattan federal court found Martoma used secret tips on clinical trials of an Alzheimer's disease drug to trade Wyeth and Elan shares. In doing so, he reaped a US$275 million benefit for the fund.

Prosecutors claimed SAC Capital reversed its bullish stance on Wyeth and Elan in July 2008, selling a US$700 million position days after Martoma learned the disappointing trial results for the drug, bapineuzumab, and shared a 20-minute phone call with Cohen. Martoma, who earned a US$9.3 million bonus connected to the trades, chose a trial after rejecting offers of a deal for co-operation.

Gardephe allowed Martoma to remain free on US$5 million bond until sentencing.

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