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Ex-Manager For Stamford-Based SAC Capital Gets 9 Years For Insider Trading

STAMFORD, Conn. -- A former portfolio manager for CR Intrinsic Investors, a division of Stamford-based SAC Capital, was sentenced Monday to nine years in federal prison for his role in a $275 million insider trading scheme involving pharmaceutical firms and drugs to treat Alzheimer's disease.

Mathew Martoma took part in a scheme that U.S. District Judge Paul G. Gardephe called “deeply corrosive to our financial markets” -- the most lucrative insider trading scheme ever, involving $275 million in illegal profits and avoided losses. 

Martoma, 40, was sentenced in Manhattan federal court. 

He was convicted of one count of conspiracy to commit securities fraud and two counts of securities fraud after a four-week jury trial in January and February.

“SAC Capital portfolio manager Mathew Martoma received a bonus of more than $9 million for the $275 million he made for his hedge fund through the most profitable insider trading scheme ever charged," Manhattan U.S. Attorney Preet Bharara said.

"Today, Martoma was sentenced to nine years in prison, and financial penalties that strip him of the ill-gotten millions in proceeds of his crime. Today’s sentence of a lengthy prison term is well-suited to the audacity of the illegal trading in this case. The long and short of Mathew Martoma’s trading is that he traded his liberty, his name and his time with his family for what in the end is nothing.”

He was also ordered to forfeit $9.3 million to the United States, representing the bonus he earned through the insider trading, as well as his interests in his Florida home and several bank accounts. Gardephe also imposed a term of three years of supervised release after his prison term.

According to court documents, Martoma was an SAC Capital portfolio manager responsible for investment decisions in public companies in the health care sector, including pharmaceutical companies Elan and Wyeth, which were involved in the development of experimental drugs to combat Alzheimer’s disease.

In the insider scheme, Martoma gained insider knowledge of drug trials. Through his trading activity, SAC Capital earned profits and avoided losses of approximately $275 million.

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