Indian-origin hedge fund portfolio manager Mathew Martoma has been convicted for his role in the $275-million insider trading scheme, the most lucrative in US history, which involved sharing of secret information on testing of a potential breakthrough Alzheimer’s drug.
Martoma, 39, was yesterday convicted on one count of conspiracy to commit securities fraud and two counts of securities fraud by the jury of seven women and five men after two days of deliberations in the trial that lasted four weeks.
The maximum prison sentence on all the three counts is 45 years but Martoma could be given a lesser prison time under federal sentencing guidelines.
The former portfolio manager of CR Intrinsic Investors, a division of SAC Capital, also faces a fine of over $5 million on the charges.
Martoma, wearing a dark suit and blue tie, sat expressionless next to his lawyer as the verdict was read out. His wife Rosemary, sitting behind him in the courtroom, cried with her hands clasped together on hearing the verdict.
The Martomas did not speak to reporters as they exited the courthouse, holding each other’s hands.
Martoma’s lawyer Richard Strassberg said he was “very disappointed” with the verdict and plans to appeal.
US District Judge Paul Gardephe did not immediately set a sentencing date.
The verdict is another victory for India-born prosecutor Preet Bharara who had an unbroken record in insider trading cases having secured 78 convictions since 2009 during his tenure as US attorney for the Southern District of New York.
Martoma is the 79th person convicted of insider trading.
Fifty-eight of the 79 individuals have been sentenced, including prominent Wall Street executives like ex-Goldman director Rajat Gupta and billionaire hedge fund founder Raj Rajaratnam. Ten other cases are still pending.
Following the verdict, Bharara said Martoma “cultivated and purchased” the confidence of doctors with secret knowledge of an experimental Alzheimer’s drug, and used it to engage in illegal insider trading, helping make profits and avoid losses for SAC in an amount totalling approximately $276 million.
Martoma was arrested in November 2012 from his home in Boca Raton, Florida and was free on a $5-million bail.
Martoma’s verdict was the eighth insider trading conviction of a current or former employee at SAC Capital, the $14-billion hedge fund founded by Steven Cohen.