According to former SAC Capital Advisors LP hedge fund manager Mathew Martoma, the 20 year-term recommended jail term for his insider trading conviction is outrageous. Martoma 's camp has filed a request yesterday for a federal judge to reconsider the suggested prison sentence for his crime. Martoma was convicted on two counts of securities fraud and one count of conspiracy after he aided his former employer to avoid and profit on illegal tips about a drug to treat Alzheimer's disease by trading in Elan Corp and Wyeth LLC, Bloomberg said.
The ex-trader, who will be turning 40 this month, will be receiving his sentence from US District Judge Paul Gardephe in Manhattan on June 10. The US government reportedly dubbed the insider trading scheme Martoma was involved in as the biggest in US history by dollar value. The scheme had supposedly yield SAC Capital $276 million.
Defense lawyer Richard Strassberg said in yesterday's court filing, "Martoma was convicted of insider trading over the course of at most two weeks based on one piece of information from one tipper about one event. Martoma is less culpable than other recent insider trading defendants."
In the filing, Strassberg had cited cases he said were similar to Martoma's case, and that the defendants in the mentioned cases were said to have received at least two years in jail sentences. The news agency said US prosecutors have yet to put up their sentencing request.
Bloomberg said the federal investigators had been seeking cooperation from both Martoma and SAC capital founder Steven Cohen in their seven-year probe, but were rebuffed. Because of a $700 million sell position on the drug bapineuzumab based on Martoma's receipt of the unfavorable trial results illegally, the former trader earned a $9.3 million bonus, prosecutors said. They also claimed that Cohen and Martoma also shared a 20-minute phone conversation.
Cohen has since denied any wrongdoing, and his firm had reached a $1.8 billion settlement to illegally profiting from insider trading and for negligence. Bloomberg said that although Cohen was never charged, he is currently a subject of an administrative proceeding by the US Securities and Exchange Commission.
