Mathew Martoma, the former portfolio manager at SAC Capital Advisors, is set to stand trial on Nov. 4, almost a year after federal authorities charged him in what they call the largest insider trading case ever brought.
The date was scheduled on Wednesday during a pre-trial conference in Federal District Court in Manhattan before Judge Paul G. Gardephe, who will also preside over the trial. Lawyers for the government and Mr. Martoma estimated that the case will take two to three weeks.
Federal prosecutors have accused Mr. Martoma of making more than $276 million in a combination of illegal profits and avoided losses trading in the shares of the pharmaceutical companies Elan and Wyeth. They said that he illegally traded the stocks after obtaining secret information from a doctor about the negative results of clinical trials for an Alzheimer’s drug the companies were developing.
Mr. Martoma’s prosecution represented a watershed moment in its multiyear investigation of insider trading at SAC because for the first time, the government linked Mr. Cohen to the trading activity that it contends was illegal. Mr. Cohen has not been accused of any wrongdoing and has said he behaved appropriately at all times.
The evidence that brings Mr. Cohen into the case centers on the unknown content of a 20-minute telephone conversation between Mr. Martoma and Mr. Cohen the night before SAC began aggressively selling off their large positions in Elan and Wyeth. Prosecutors have not accused Mr. Cohen of knowing that Mr. Martoma had the supposed confidential information about the drug trials when he sold the stocks.
Prosecutors have built their case against Mr. Martoma by securing the cooperation of Dr. Sidney Gilman, a neurology professor who allegedly leaked to him the confidential data about the drug being jointly developed by Elan and Wyeth. The companies hired Dr. Gilman to oversee the clinical trials. SAC paid Dr. Gilman about $108,000 as a consultant.
In an unusual arrangement, prosecutors have reached a non-prosecution agreement with Dr. Gilman that insulates him from any charges related to the case. Dr. Gilman is expected to testify against Mr. Martoma.
Mr. Martoma, 38, left SAC in 2010 after being fired for poor performance. In 2008, the year of the Elan and Wyeth trades, SAC paid him a $9.3 million bonus. A graduate of Duke University and Stanford Business School, he lives in Boca Raton, Fla., with his wife, a physician, and three young children. If convicted, he faces up to 25 years in prison.
Leading Mr. Martoma’s legal team is Richard M. Strassberg of Goodwin Procter. In April, Mr. Martoma changed lawyers, replacing Charles A. Stillman with Mr. Strassberg. The move fueled speculation that Mr. Martoma might plead guilty and cooperate with the government in helping it build a case against Mr. Cohen. But Mr. Strassberg is a seasoned trial lawyer and there has been nothing to suggest that Mr. Martoma won’t be having his case heard by a jury.
For the government, assistant United States attorney Arlo Devlin Brown is leading the prosecution.
November will be a busy month in the federal courthouse for onetime SAC employees. On Nov. 18, the trial of Michael S. Steinberg, another former SAC portfolio manager charged in a separate alleged insider trading scheme related to the trading of technology stocks, is expected to start.
The odds are against both Mr. Martoma and Mr. Steinberg in securing an acquittal. Of the 81 individuals charged by the United States attorney’s office in Manhattan since 2009, 10 have taken their cases to trial, and all have been convicted.
