Ex-SAC fund manager indicted in insider trading scheme
By Emily Flitter and Nate Raymond
NEW YORK (Reuters) - Federal prosecutors on Friday lost one opportunity to build a case against hedge fund manager Steven A. Cohen when a grand jury indicted one of Cohen's former employees on charges related to an insider trading scheme, severely reducing the possibility he would cooperate as a witness against Cohen.
The grand jury in New York returned an indictment against Mathew Martoma, a former portfolio manager at CR Intrinsic Investors, one of SAC Capital Management's funds, in what prosecutors have called the "most lucrative" insider trading scheme ever.
Martoma, 38, of Boca Raton, Florida, was indicted on three counts of conspiracy to commit securities fraud and securities fraud related to trades made in Elan Corp Plc and Wyeth - now part of Pfizer Inc - based on tips prosecutors say he received from a doctor.
The trades allegedly helped CR Intrinsic avoid losses and reap profits totaling $276 million in the summer of 2008. The indictment followed an earlier criminal complaint federal prosecutors filed November 20.
Martoma is the seventh former employee of Cohen's to be charged or implicated in insider trading schemes, and the criminal complaint against him is the first to refer to Cohen.
Cohen appears as "Hedge Fund Owner" in the criminal complaint and "hedge fund manager A" in the corresponding civil complaint against Martoma, filed by the U.S. Securities and Exchange Commission, according to a source familiar with the case.
"Though disappointing, today's events come as no surprise," said Martoma's lawyer, Charles Stillman, founding member of Stillman Friedman in New York.
"The simple fact is that Mathew Martoma did not trade on inside information, is innocent of all these charges, and we look forward to his ultimate vindication." Continued...