Skip to main content
Press Release

SAC Capital Portfolio Manager Mathew Martoma Found Guilty In Manhattan Federal Court Of Insider Trading Charges

For Immediate Release
U.S. Attorney's Office, Southern District of New York
Most Lucrative Insider Trading Scheme Ever Charged Earned S.A.C. Capital $275 Million In Illegal Profits And Avoided Losses

Preet Bharara, the United States Attorney for the Southern District of New York, announced that MATHEW MARTOMA, a former portfolio manager of CR Intrinsic Investors, LLC, a division of S.A.C. Capital, was found guilty today in Manhattan federal court in connection with his participation in the most lucrative insider trading scheme ever charged, involving approximately $275 million in illegal profits and avoided losses. MARTOMA was convicted after a four-week jury trial presided over by U.S. District Judge Paul G. Gardephe.

Manhattan U.S. Attorney Preet Bharara said: “As the jury unanimously found, Mathew 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. Martoma bought the answer sheet before the exam – more than once – netting a quarter billion dollars in profits and losses avoided for SAC, as well as a $9 million bonus for him. In the short run, cheating may have been profitable for Martoma, but in the end, it made him a convicted felon, and likely will result in the forfeiture of his illegal windfall and the loss of his liberty. Mathew Martoma becomes the 79th person convicted of insider trading after trial or by guilty plea in this District in the last four years.”

According to the allegations in the Superseding Indictment filed in Manhattan federal court, other court documents, and the evidence presented at trial:

During the period of the insider trading scheme, MARTOMA was an S.A.C. Capital portfolio manager responsible for investment decisions in public companies in the health care sector, including pharmaceutical companies Elan and Wyeth, that were involved in the development of experimental drugs to combat Alzheimer’s Disease. At the time, scientists and investors alike were awaiting the results of a clinical trial being conducted by Elan and Wyeth for a drug called bapineuzumab, which offered a novel but untested approach to the treatment of Alzheimer’s Disease (the “Drug Trial”).

In order to obtain material nonpublic information (the “Inside Information”) about the Drug Trial, MARTOMA, shortly after starting his employment at S.A.C. Capital in the summer of 2006, began using expert networking firms to try to speak to doctors involved in the Drug Trial with access to confidential information. Through these efforts, MARTOMA arranged dozens of paid consultations with one of the Drug Trial’s principal investigators, Dr. Joel Ross, and the chairman of the Drug Trial’s Safety Monitoring Committee (“SMC”), Dr. Sidney Gilman. Through an exploitation of MARTOMA’s personal and financial relationships with these doctors, MARTOMA was able to obtain Inside Information about the Drug Trial.

The Inside Information that MARTOMA initially received from Dr. Ross included anecdotal reports concerning patients under Dr. Ross’s care. The Inside Information MARTOMA initially received from Dr. Gilman included generally positive safety data about which Dr. Gilman was aware through his chairmanship of the SMC. In fact, MARTOMA arranged a paid consultation shortly after each and every SMC meeting, in part to ensure that he would be among the first to learn if any substantial safety issues were emerging from the Drug Trial that could lead to the cancellation of the Drug Trial and decreases in the price of Elan and Wyeth stock. Based in part on the positive safety information, MARTOMA purchased and held shares of Elan and Wyeth, and further recommended that the owner of S.A.C. Capital (the “S.A.C. Capital Owner”) purchase and hold Elan and Wyeth securities, which the S.A.C Capital Owner did. By the spring of 2008, S.A.C. Capital held approximately $700 million worth of Elan and Wyeth equity securities.

Elan and Wyeth planned to release the full results of the Drug Trial to the investing public at the International Conference on Alzheimer Disease (the “ICAD Presentation”) on July 29, 2008. Dr. Gilman was selected to present the results on behalf companies and was “unblinded” to the full safety and efficacy results of the drug trial on July 15, 2008. Until that time, Dr. Gilman had only been privy to the safety results of the Drug Trial. On July 17, 2008, Dr. Gilman received a draft PowerPoint presentation that had been created for the ICAD meeting and that was marked “Confidential, Do Not Distribute.” The draft PowerPoint presentation showed that the Drug Trial results were negative, particularly in comparison with market expectations. The results raised serious questions about how well the drug worked and, in fact, whether it worked at all.

Later on July 17, 2008, MARTOMA called Dr. Gilman from his home and spoke to Dr. Gilman in detail about the draft PowerPoint presentation during a phone call that lasted one hour and forty-five minutes. Then, on Saturday, July 19, 20008, MARTOMA flew roundtrip from New York City to Detroit, Michigan, to meet Dr. Gilman in his University of Michigan office and review the draft PowerPoint presentation further.

The next day, Sunday, July 20, 2008, MARTOMA sent the owner of S.A.C. Capital (the “S.A.C. Capital Owner”) an email in which he wrote that “…It’s important [that we speak,]” which they did, for approximately 20 minutes. The S.A.C. Capital Owner then directed S.A.C Capital to sell Elan and Wyeth securities prior to the ICAD Presentation. Over the next seven days, S.A.C. Capital liquidated its entire equity position in Elan and almost all of its equity position in Wyeth – a total of 17.7 million shares worth approximately $700 million. S.A.C. Capital also shorted Elan and Wyeth by approximately 7.75 million shares. This trading represented over 20% of the reported U.S. trading volume in Elan and 11% of the volume in Wyeth.

MARTOMA also received information about the ICAD presentation from Dr. Joel Ross. In particular, on the evening of July 28, 2008, after Dr. Ross had been un-blinded to the Drug Trial results at a dinner for Principal Investigators, Dr. Ross met with MARTOMA in a hotel lobby to discuss the negative results. To Dr. Ross’s surprise, MARTOMA already seemed to have seen the Drug Trial results.

The day after the ICAD presentation, Elan stock closed approximately 42% lower, and Wyeth shares fell approximately 11%. Through this trading activity S.A.C. Capital earned profits and avoided losses of approximately $275 million.

MARTOMA, 39, was convicted of one count of conspiracy to commit securities fraud and two counts of securities fraud. He faces a maximum penalty of five years in prison for the conspiracy charge and 20 years in prison on each of the two securities fraud charges. With respect to the conspiracy charges, he faces a maximum fine of $250,000, or twice the gross gain or loss derived from the crimes, and for the securities fraud charges, he faces a maximum fine of $5 million, or twice the gross gain or loss derived from the crime on each charge.

Mr. Bharara praised the efforts of the FBI and also thanked the SEC for its assistance in the investigation. He added that the investigation is continuing.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Arlo Devlin-Brown, Eugene Ingoglia, Megan Gaffney, and Andrea Griswold are in charge of the prosecution.

U.S. v. Mathew Martoma S1 Indictment.pdf

Updated May 18, 2015

Press Release Number: 14-040