Ex-SAC fund manager found guilty of insider trading
Matthew Martoma was found guilty of insider trading in what prosecutors say is one of the largest insider-trading schemes of all time. Martoma is the eighth ex-SAC employ to receive a sentence.
February 07, 2014 at 07:43 AM
2 minute read
The original version of this story was published on Law.com
SAC Capital Advisers LP has been flagged as a hotbed for illicit trading practices, and on Feb. 7 prosecutors found yet another ex-SAC employee guilty of violating trading regulations. Matthew Martoma was found guilty in what prosecutors say is one of the largest insider-trading schemes of all time. Martoma is the eighth ex-SAC employ to receive a sentence.
Martoma was convicted for his involvement in illegal trades — said to be worth a total of $275 million — related to two pharmaceutical companies. Based on the laws violated, Martoma could face up to 45 years in prison, though he is likely to do considerably less time. Michael Steinberg, another ex-SAC worker, was also convicted of wrongdoing in relation to those trades.
Prosecutors hope that the conviction of Martoma and Steinberg will help support another case pending against SAC founder Steven A. Cohen. While Cohen has managed to shirk criminal charges relating to insider trading, the Securities and Exchange Commission (SEC) has a pending case probing his oversight of the deals made by those he managed. These two high profile convictions give the SEC a firm footing for that suit. Martoma was unwilling to testify against Cohen.
“It will be difficult for Mr. Cohen to say he properly supervised his employees when he has a series of employees who have been convicted of the same thing: insider trading,” said Thomas Gorman, a partner at Dorsey & Whitney LLP and a former SEC enforcement lawyer in an interview with the Wall Street Journal.
During another insider-trading case in November of 2013, employees said that Cohen was close to many of the deals made, control deals firm-wide. With its pending civil trial, the SEC seeks to bar Cohen from participation in securities trading. The case against Cohen will resume later this year.
For more on insider trading check out this Inside Counsel coverage:
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