A jury began deliberating on Tuesday on whether to convict Mathew Martoma of insider trading stemming from trades made while working at Steven A. Cohen's SAC Capital Advisors hedge fund, in what prosecutors called the most lucrative such scheme in U.S. history.
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U.S. District Judge Paul Gardephe in Manhattan spent the morning instructing the seven women and five men on the jury before they began their deliberations. Jurors include a bus driver, an employment lawyer and a film professor.
Martoma, 39, is accused of from 2006 to 2008 seeking out confidential information from doctors involved in a clinical trial for an Alzheimer's disease drug being developed by Elan Corp Plc and Wyeth, now owned by Pfizer Inc.
Prosecutors said SAC Capital began selling off its $700 million position in Elan and Wyeth in July 2008, based on a tip Martoma got from a doctor, Sidney Gilman, about negative trial results for the drug that were not made public until later that month. Thanks to the trades, SAC Capital made profits and avoided losses of $275 million, prosecutors say.
Most of the trading took place in accounts controlled by Cohen, who prosecutors say Martoma had a 20-minute phone call with after receiving information about the negative results.
Martoma, a former portfolio manager at SAC, denies wrongdoing. His lawyer Richard Strassberg told jurors Monday that prosecutors erred in charging his client "in their haste to make a case against someone who is not even in this courtroom: Mathew Martoma's boss, Steven Cohen."
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Cohen, 57, has not been criminally charged. But the U.S. Securities and Exchange Commission is seeking to bar Cohen from the financial services industry for failing to supervise Martoma and Michael Steinberg, another portfolio manager convicted in December on insider trading charges. Cohen denies wrongdoing.
In total, prosecutors have charged eight current of former employees at Cohen's hedge fund. SAC Capital last year agreed to pay $1.8 billion in criminal and civil settlements and plead guilty to fraud charges stemming from insider trading by its employees.
SAC Capital is scheduled to be sentenced March 14. It is meanwhile in process of converting into a so-called family office that will manage Cohen's estimated $9 billion fortune.
The case is U.S. v. Martoma, U.S. District Court, Southern District of New York, No. 12-cr-00973.