SAC's Martoma gets nine years prison for insider trading

Mon Sep 8, 2014 6:36pm EDT
 
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By Nate Raymond

NEW YORK (Reuters) - Mathew Martoma, a former portfolio manager at billionaire Steven A. Cohen's SAC Capital Advisors LP hedge fund, was sentenced on Monday to nine years in prison for engaging in what authorities called the most lucrative insider trading scheme in U.S. history.

U.S. District Judge Paul Gardephe in New York said he had to account for the "enormous" $275 million gain SAC obtained as a result of illegal trades in pharmaceutical stocks. Prosecutors said the trades were based on tips Martoma received about a clinical trial for an Alzheimer's drug.

"I cannot and will not ignore that the gain is hundreds of millions of dollars more than ever seen in an insider trading prosecution," Gardephe said.

The sentence came despite appeals for leniency by Richard Strassberg, Martoma's lawyer, who cited "fragile family circumstances." Gardephe also ordered Martoma to forfeit $9.3 million, including his Boca Raton, Florida, home.

While Martoma, 40, faced up to 19-1/2 years in prison under federal sentencing guidelines, Gardephe said such punishment should be reserved for repeat offenders or criminal enterprise leaders.

But the judge said a severe sentence was nonetheless necessary, saying "there was nothing accidental about Mr. Martoma's conduct or the gain realized."

Martoma, whom a jury convicted in February of securities fraud and conspiracy, made no comment as he left the court holding his wife's hand.

The ex-trader and his family were "devastated by the outcome," said Lou Colasuonno, a spokesman for Martoma, saying an appeal is planned.   Continued...

 
Former SAC Capital Advisors portfolio manager Mathew Martoma (C) exits the U.S. District Court for the Southern District of New York with his wife Rosemary (center R ), following sentencing for insider trading, in Lower Manhattan September 8, 2014.   REUTERS/Brendan McDermid