The criminal insider trading case against Mathew Martoma, the former SAC Capital Advisors portfolio manager, was built in part on interviews and depositions by federal authorities with several of his former colleagues at the hedge fund, according to a recent court filing.
The filing in the case reveals that the federal authorities investigating allegations of insider trading by Mr. Martoma in shares of two drug companies in July 2008 interviewed or took testimony from more than a dozen people who once worked with him at SAC, which was founded by Steven A. Cohen.
Jury selection in Mr. Martoma’s trial is set to begin on Tuesday in federal court in Lower Manhattan.
It has been known for a while that United States securities regulators took a deposition on May 3, 2012, from Mr. Cohen as part of the investigation. But the full extent of the government’s interviews with current and former employees of SAC was not previously known.
The court filing by lawyers for Mr. Martoma discloses extensive cooperation between prosecutors and lawyers from the Securities and Exchange Commission during the investigation, which appears to have picked up steam in February 2012.
Federal prosecutors could call several former SAC traders and analysts as witnesses during the trial, which is expected to last as long as four weeks, said lawyers briefed on the matter, who spoke on the condition of anonymity. The filing does not say what the people interviewed said to the authorities.
Mr. Martoma is charged with using inside information to help SAC avoid losses and generate profits totaling $276 million in shares of Elan and Wyeth in July 2008. He faces up to 45 years in prison if convicted. The S.E.C. also filed a civil insider trading lawsuit against Mr. Martoma, who is 39 and lives in Boca Raton, Fla.
Prosecutors have not filed any charges against Mr. Cohen, whose hedge fund pleaded guilty to insider trading violations in November. Mr. Cohen is not expected to be called as a witness during Mr. Martoma’s trial.
But other high-ranking executives who worked with Mr. Martoma were also interviewed by the authorities about the same time that Mr. Cohen sat for his deposition with the S.E.C.
Jason Karp, a former director of research at CR Intrinsic, the division of SAC where Mr. Martoma worked, was interviewed by federal prosecutors and the S.E.C. on May 8, 2012. The interview with Mr. Karp took place about the same time he was beginning to raise money for a hedge fund he started later that year.
A person briefed on the matter but not authorized to discuss the interviews said Mr. Karp told investigators that he was privy to discussions during which some at SAC took issue with Mr. Martoma’s initial support for an experimental Alzheimer’s drug being developed by Elan and Wyeth. The authorities contend that Mr. Martoma, relying on nonpublic information from a doctor who was a consultant on the clinical trial for the drug, recommended that SAC sell a big stake in shares of both companies before the news of the drug trial became public.
Others with SAC who were jointly interviewed by prosecutors and securities regulators include the hedge fund’s head trader, Phillipp Villhauer; its president, Thomas J. Conheeney Jr.; SAC’s director of research, Perry Boyle; and its chief operating officer, Solomon Kumin, who plans to retire soon.
The federal authorities also interviewed then SAC health care analyst, David Munno, and took deposition testimony from two other former SAC health care analysts at the time, William Hoh and Benjamin Slate. Some of those analysts were said not to have shared Mr. Martoma’s early optimism for the experimental Alzheimer’s drug, said people briefed on the matter but not authorized to discuss the case.
Besides Mr. Cohen, the S.E.C. deposed Mr. Villhauer and Chandler Bocklage, a trader at SAC who at one time worked closely with Mr. Cohen.
