SAC’s Martoma: U.S. must disclose evidence in his favor

Former SAC Capital Advisors LP portfolio manager Mathew Martoma asked a judge to force the government to turn over evidence that he says can help him beat insider trading charges as his case goes to trial next month.
Mr. Martoma in a request filed Thursday in federal court in Manhattan said prosecutors have failed to provide him with communications between the government and lawyers for the two scientists who allegedly gave him non-public information about drug trials and who will be key government witnesses.
Mr. Martoma, 39, is scheduled to go on trial Jan. 6, weeks after a federal jury found another former SAC manager, Michael Steinberg, guilty of using illegal tips to trade stocks of technology companies. Last month, SAC agreed to plead guilty and pay a record $1.8 billion for perpetrating an insider-trading scheme stretching back to 1999.
Prosecutors in the case against Mr. Martoma claim SAC liquidated its $700 million stake in Wyeth and Elan Corp. in July 2008 and then shorted the stocks, within a week of Mr. Martoma obtaining confidential information about negative test results from a clinical trial on bapineuzumab, a drug intended to treat Alzheimer’s disease.
In Thursday’s filing, Mr. Martoma said the two scientists, Sidney Gilman and Joel Ross, initially told the government they weren’t involved in passing insider information to him. Martoma said those assertions contradict the charges against him.
“Both Dr. Gilman and Dr. Ross received nonprosecution agreements in exchange for their testimony against Mr. Martoma,” according to the filing. “Mr. Martoma reasonably believes that the government must have communicated with counsel for Drs. Gilman and Ross regarding potential criminal charges in the absence of their cooperation.”
The discussions between the government and the lawyers for the two men are “material, exculpatory information” that must be disclosed, Mr. Martoma said.
Manhattan U.S. Attorney Preet Bharara said after SAC’s plea that his investigation of the Stamford, Conn., hedge fund’s employees continues and that the firm’s plea agreement doesn’t provide any individual immunity from prosecution.
While SAC’s billionaire founder Steven Cohen, 57, hasn’t been charged with a crime, the U.S. Securities and Exchange Commission filed an administrative action against him in July.
(Bloomberg News)