2013 41 Insider Trading

Mathew Martoma, a portfolio manager at S.A.C. Capital Advisors, orchestrated a $275 million insider trading scheme by obtaining confidential clinical trial data on Elan and Wyeth drugs from consultant Dr. Sidney Gilman, directing sell orders that avoided $138 million in losses for CR Intrinsic and $137 million for S.A.C., leading to his 2014 conviction on securities fraud and conspiracy and a nine-year prison sentence.

Mathew Martoma, a portfolio manager at S.A.C. Capital Advisors, obtained non-public information about failed clinical trials for Elan and Wyeth drugs from Dr. Sidney Gilman, a consultant linked to an expert network. He used this insider information to direct massive sell orders in portfolios managed by CR Intrinsic Investors and S.A.C. Capital, avoiding $138 million and $137 million in losses respectively, for a total of $275 million in illegal gains. In 2014, Martoma was convicted of securities fraud and conspiracy and sentenced to nine years in prison, marking one of the largest insider trading convictions in U.S. history.

Mathew Martoma, a portfolio manager at S.A.C. Capital Advisors, orchestrated a $275 million insider trading scheme by obtaining confidential, non-public information about failed Phase II clinical trial results for Elan and Wyeth’s Alzheimer’s drug, bapineuzumab, from Dr. Sidney Gilman, a neurologist serving as a consultant to both Elan and an expert network. Martoma used this information to direct aggressive sell orders in two portfolios: CR Intrinsic Investors, avoiding $138 million in losses, and S.A.C. Capital Advisors, avoiding $137 million, totaling the $275 million in illegal profits and loss avoidance detailed by the SEC. The scheme was uncovered through wiretap evidence and financial records, leading to Martoma’s indictment in 2012. In 2014, after a high-profile trial, he was convicted on charges of securities fraud and conspiracy, becoming one of the most significant insider trading cases in U.S. history. He was sentenced to nine years in federal prison, the longest term ever imposed for insider trading at the time. The case also led to the eventual closure of S.A.C. Capital Advisors, which paid over $1.8 billion in penalties. Dr. Gilman, who provided the inside information, pleaded guilty and cooperated with prosecutors, receiving a reduced sentence.