Manhattan’s India-born top federal prosecutor Preet Bharara, who had brought the case against Martoma, described the charges as “the most lucrative insider trading scheme ever charged”.
Martoma was arrested in November 2012 from his home in Boca Raton, Florida and has been freed on a $5 million bail. A Stanford graduate, Martoma joined the hedge fund company SAC Capital Advisors in 2006 and had worked with the firm’s affiliate CR Intrinsic Investors. The trial, which is expected to last nearly a month, will shed light on any role SAC founder Steven Cohen has in the trades at the center of the cases. Cohen has not been charged with any wrongdoing.
In the Jan 6 ruling, presiding judge Paul Gardephe said prosecutors cannot introduce evidence that Martoma had fainted when FBI agents approached him in November 2011 on the lawn of his $1.9 million Boca Raton home, telling him that they wanted to talk “about insider trading” at SAC. The judge said it would not be appropriate to assume Martoma fainted because he knew he was guilty. “In the life of such a person - someone with no criminal record and no prior involvement with the criminal justice system - such an encounter is a watershed event,” Gardephe said. Federal prosecutors have accused Martoma of using material, non-public information that he received from a doctor in 2008 on the clinical trial of an Alzheimer’s disease drug to make profits and avoid losses for SAC in an amount totaling approximately $276 million. (PTI)