Former SAC Capital Advisors LP fund manager Mathew Martoma’s arrest came six years after he set upon a path that has led him to a choice: one between a trial that may land him in prison for decades, or a deal to implicate others, possibly including SAC founder Steven A. Cohen.


Nov. 21 (Bloomberg) — Douglas Burns, a former federal prosecutor, talks about the U.S. government insider-trading charges against Mathew Martoma, a former health-care portfolio manager at a unit of Steven A. Cohen’s SAC Capital Advisors. U.S. prosecutors allege that Martoma traded on inside tips about clinical trials of an Alzheimer’s drug and netted the firm as much as $276 million. Burns speaks with Pimm Fox and Stephanie Ruhle on Bloomberg Television’s “Market Makers.” Bloomberg’s Katherine Burton also speaks. (Source: Bloomberg)

Steven “Steve” Cohen, chairman and chief executive officer of SAC Captial Advisors LP. Photographer: Simon Dawson/Bloomberg

Martoma, 38, used illegal tips to help SAC make $276 million on shares of pharmaceutical companies Elan (ELN) Corp. and Wyeth LLC, according to the Justice Department and the Securities and Exchange Commission. Arrested last week, he appeared today in Manhattan federal court for masterminding what the U.S. calls the most lucrative insider-trading case ever.

It was Martoma’s six-year friendship with Dr. Sidney Gilman, an 80-year-old University of Michigan neurologist involved in a clinical trial of an Alzheimer’s disease drug, that led to his prosecution. Gilman was helping develop the drug for Dublin-based Elan and Wyeth, now owned by New York-based Pfizer Inc. (PFE) He leaked data on the trial to Martoma, who advised Cohen on whether SAC should buy or sell Elan and Wyeth shares, authorities alleged. Gilman, who entered a non-prosecution agreement according to his lawyer Marc Mukasey, is cooperating with the probe.

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