Dr. Sidney Gilman, the government’s most important witness in the insider trading trial of Mathew Martoma, a former SAC Capital Advisors portfolio manager, showed signs of a faulty memory on the stand on Wednesday.
Dr. Gilman, who is 81, told the jury that it was only two weeks ago that he recalled the full details of a crucial visit by Mr. Martoma to his office at the University of Michigan on July 19, 2008.
It was during that meeting, Dr. Gilman testified, that he gave Mr. Martoma inside information related to the results of a clinical trial for an experimental Alzheimer’s drug that would be made public two weeks later.
“There still remain some holes in my memory,†Dr. Gilman said as prosecutors wrapped up a little more than two days of direct testimony from him. He did not elaborate on how he had come to refresh his memory about the meeting.
But under cross-examination later by Mr. Martoma’s lawyers, Dr. Gilman said that he had met with prosecutors a “couple of dozens of times†since agreeing to cooperate with the government in September 2012.
The defense has accused the prosecution during opening statements of mounting a case “riddled with inconsistencies†based on Dr. Gilman’s previous statements to the authorities.
But on Wednesday, Dr. Gilman’s inability to recall insignificant points and his combativeness toward Richard Strassberg, one of Mr. Martoma’s lawyers, slowed down the trial and made it difficult for the defense to gain traction.
Dr. Gilman, a former medical professor at the University of Michigan, was a neuroscientist who specialized in Alzheimer’s research and was the chairman of the safety committee for the clinical trial of a drug for Alzheimer’s disease being jointly developed by the pharmaceutical companies Elan and Wyeth. He also worked as a paid consultant for Gerson Lehrman, a network that connected industry experts with hedge funds like SAC. Mr. Martoma met Dr. Gilman in January 2006 through Gerson Lehrman.
The doctor’s testimony that he repeatedly gave Mr. Martoma inside information in “minute detail†is the linchpin of the government’s contention that Mr. Martoma engineered the largest insider trading scheme in history.
His case is part of an elaborate investigation into the workings of SAC, the hedge fund founded by the billionaire investor Steven A. Cohen. Mr. Martoma’s trial, now in its second week, comes a month after another former SAC employee, Michael Steinberg, was found guilty on five counts of insider trading. Six other former SAC employees have pleaded guilty, and the firm itself has pleaded guilty to securities fraud charges and agreed to pay a $1.2 billion penalty.
Prosecutors contend that Mr. Martoma cultivated a friendship with Dr. Gilman to gain access to highly sensitive information related to the drug trial, information that helped him and SAC avoid losses and make profits of $276 million.
At various points during the cross-examination, Dr. Gilman took long pauses before answering, requiring Mr. Strassberg to ask whether he understood or heard the question. At other times, Dr. Gilman would ask Mr. Strassberg to repeat the question, and occasionally he would pointedly ask Mr. Strassberg if his question was intended to be a point or a question.
In one exchange, Dr. Gilman even took a jab at Mr. Strassberg, who at times speaks quickly and has a tendency to ask compound questions. “You were slurring your words, I can’t quite hear you,†Dr. Gilman said.
The defense, which will continue its cross-examination on Thursday morning, has yet to land any solid blows to undermine Dr. Gilman’s testimony. But it did score some points in noting that he had trouble remembering a round-table meeting put together by Gerson Lehrman with 17 analysts, including Mr. Martoma, on April 15, 2008.
And Dr. Gilman testified that the last time he saw Mr. Martoma was on July 30, 2008, a day after Elan announced the negative trial results to the public. But as he was questioned by Mr. Strassberg, Dr. Gilman said he did not recall a separate meeting with Mr. Martoma in April 2009 even though it was on his calendar.
“I don’t recall I saw him that day,†Dr. Gilman said, suggesting that the meeting may have been canceled but that he did not know for sure.
Another doctor, Joel S. Ross, testified last week that he also provided inside information about his patients during the clinical trial. Both doctors have signed nonprosecution agreements with the government, which give them immunity.
