New York: A bid for acquittal and fresh trial filed by an Indian-origin portfolio manager, convicted for his role in the most lucrative insider trading scheme in US history, has been denied by a court which ruled that evidence in the case “overwhelmingly” showed that he is guilty.
Mathew Martoma, 39, will be sentenced on the scheduled date of September 8 after US District Judge Paul Gardephe denied his motion for a judgement of acquittal and alternatively for a new trial.
Martoma was convicted in February for his role as the “central figure” in one of the most lucrative insider trading schemes in US history.
US Attorney for the Southern District of New York Preet Bharara has said in court papers that Martoma should be handed
down a “significant period of imprisonment” that is more than the eight years recommended by the probation department.
Bharara has also asked the court to order Martoma to forfeit his 2008 bonus totalling USD 9.4 million and pay a separate fine to reflect the “serious offense” committed by him.
In rejecting Martoma's motion to throw out his insider trading conviction, Gardephe said Martoma offered no persuasive argument in the trial against the “overwhelming circumstantial evidence” demonstrating that he traded on the securities of pharma companies Elan and Wyeth for his hedge fund SAC Capital after receiving confidential information from two doctors about an Alzheimer's disease drug trial.
The judge said that Martoma and SAC Capital were able to make profits and avoid losses totalling USD 275 million because of the inside information he had “wrongfuly” obtained from the two doctors, while countless other investors who were not privy to this information had to “bear the full brunt” of the decline in stock prices of Elan and Wyeth.
“The assertion that there are no victims of Martoma's crimes is as astounding as it is meritless,” the judge said.
The judge ruled that evidence at trial was sufficient to demonstrate that Martoma knew that he had received material, non-public information from the two doctors in violation of their duties to Elan and Wyeth.
The judge also rejected Martoma's assertion that he should be granted a new trial because the jury had become biased against him after it was revealed during the case that he had been expelled from Harvard in 1999 for allegedly doctoring his law school transcript to try to gain a federal clerkship.
Martoma had even changed his name from Ajai Mathew Thomas before applying to Stanford, where no one knew that he had been expelled from Harvard.
Following his conviction, Martoma was stripped of his MBA degree by Stanford business school, the first time the prestigious US institution has revoked a graduate's degree.
Gardephe said Martoma's arguments in seeking a new trial are “not persuasive” since no evidence concerning Martoma's expulsion from Harvard Law School was introduced at trial.
Bharara has said that Martoma was the “central figure in the most lucrative insider trading scheme ever charged” and his entire success across his four years at SAC Capital was based on illegal insider trading.
SAC had last year pleaded guilty to insider trading and agreed to pay USD 1.8 billion to settle the criminal and civil charges against it.
It has since changed its name to Point72 Asset Management and now only manages the personal wealth of its founder Steven Cohen, who has not been criminally charged.
