Feds pressure Martoma to flip on Steven Cohen.
Charlie Gasparino and former FBI special agent Mark Rossini break down the details of the most lucrative insider-trading case in U.S. history.
A former portfolio manager for Steven A. Cohen’s SAC Capital Advisors was charged with what U.S. prosecutors called a record-setting insider-trading scheme that netted as much as $276 million for the hedge fund.
Mathew Martoma, 38, traded on inside tips about clinical trials of bapineuzumab, a drug intended to treat Alzheimer’s disease, prosecutors in the office of Manhattan U.S. Attorney Preet Bharara said in a criminal complaint unsealed today. The U.S. Securities and Exchange Commission sued Martoma, his former hedge fund and the doctor who allegedly passed him the tips.
Martoma allegedly advised Cohen to sell shares of Wyeth LLC (PFE) and Elan Corp., the companies that were developing the drug, before bad news about its performance was announced. Cohen’s firm sold its Elan and Wyeth holdings to avoid losses and profited from short positions in the stocks, prosecutors said.
“Mathew Martoma and his hedge fund benefitted from what might be the most lucrative inside tip of all time,” Bharara said at a press conference today. “This is certainly the most lucrative insider-trading scheme ever charged.”
The SEC put together this chart of the ill-gotten gains.
Steven's Web of Deceit - SAC Traders Leading Feds to Cohen
As the government closes in on Cohen and SAC, here's a look at the string of former employees that the government uncovered, drawing investigators closer to Cohen.
Choo Beng Lee: Lee was a former SAC analyst who pled guilty to two counts of insider trading. His cooperation agreement implies that he acted improperly while employed by SAC, even though the crimes that brought him down took place after he'd left the firm. Lee tried to get rehired by Cohen while he was working with prosecutors as part of the government's investigation.
Noah Freeman: Freeman is a former SAC analyst who became a cooperating witness for the government after being accused of insider trading while at Cohen's firm. His work helped to ensnare his friend and fellow SAC alum Donald Longueil.
Donald Longueil: Longueil was an analyst at SAC subsidiary CR Intrinsic (the same unit where Maroma worked). He pled guilty to insider trading while at Cohen's firm after telling his friend Noah Freeman that he'd destroyed his computer's hard drive and spread the pieces among several dumpsters throughout Manhattan.
Jon Horvath: Horvath worked as a tech analyst at SAC subsidiary Sigma Capital Management. He was arrested along with Anthony Chiasson, a fellow SAC alum and founder of Level Global. Horvath pled guilty to insider trading. He's now cooperating with the government.
Michael Steinberg: Steinberg was Jon Horvath's superviser at Sigma Capital. He's still employed at SAC, but was recently put on leave. Steinberg is listed as an unindicted co-conspirator in the insider trading scheme that involved Horvath.
Jonathan Hollander: Hollander also worked at CR Intrinsic. He settled with the government after being accused of using inside information to trade stocks in his personal account, rather than for SAC.
Anthony Chiasson: Chiasson is an ex-SAC trader who is currently on trial for insider trading at the firm he co-founded in 2003, Level Global. As part of his defense, Chiasson's lawyers are trying to show that fellow SAC alum and Level Global co-founder David Ganek made trades that were similar to those made by Chiasson.
The offices of SAC Capital Advisors in Stamford, Connecticut.
Two of Cohen's homes.