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Ex-SAC trader Martoma seeks to toss insider trading conviction

Former SAC Capital Advisors portfolio manager Mathew Martoma walks out of the courthouse in downtown Manhattan, New York, February 6, 2014.
Former SAC Capital Advisors portfolio manager Mathew Martoma walks out of the courthouse in downtown Manhattan, New York, February 6, 2014.

By Jonathan Stempel

NEW YORK (Reuters) - Former SAC Capital Advisors LP portfolio manager Mathew Martoma asked a U.S. judge to throw out his insider trading conviction, saying federal prosecutors did not prove he committed a crime and that improper evidence and jury bias tainted the verdict.

The request submitted late Thursday night in the U.S. District Court in Manhattan was expected. It followed Martoma's February 6 conviction on two counts of securities fraud and one count of conspiracy.

"This court should enter a judgment of acquittal on all counts," Martoma, 39, told U.S. District Judge Paul Gardephe, who presided over the roughly month-long trial, in the filing. In the alternative, Martoma said he deserves a new trial.

A spokeswoman for U.S. Attorney Preet Bharara in Manhattan did not immediately respond on Friday to a request for comment.

Martoma was accused of seeking and trading on confidential information about a clinical trial involving Ireland's Elan Corp and Wyeth, now part of Pfizer Inc, over an experimental drug to treat Alzheimer's disease.

Prosecutors said his trades enabled SAC, a hedge fund run by billionaire Steven A. Cohen, to generate profit and avoid losses of $275 million from trades in Elan and Wyeth before the trial's results were announced in July 2008.

Martoma had worked in SAC's CR Intrinsic Investors unit. Based on recent sentences in insider trading cases, he could face several years in prison when he is sentenced on June 10.

Eight people who once worked for SAC have been convicted of or pleaded guilty to insider trading. SAC no longer manages outside money, and now oversees Cohen's $9 billion fortune. Cohen has not been criminally charged.

INADEQUATE PROOF

In his filing, Martoma argued that he had independent reasons to trade in Elan and Wyeth, including recommendations from SAC healthcare analysts that both stocks were overpriced, and that any tips he got were already public or immaterial.

He also said testimony from the octogenarian former University of Michigan medical professor Sidney Gilman, who testified to giving Martoma the clinical trial results, was unreliable because of his patchy memory.

Martoma also said the jury was biased because of widespread media attention during the trial to his 1999 expulsion from Harvard Law School for doctoring a transcript.

The verdict against Martoma came after a different jury in Manhattan convicted another SAC portfolio manager, Michael Steinberg, over another insider trading scheme.

SAC agreed last year to pay $1.8 billion and plead guilty to fraud stemming from employees' insider trading. Its sentencing in the criminal case is set for March 14.

The U.S. Securities and Exchange Commission is seeking to bar Cohen from the financial services industry for failing to supervise Martoma and Steinberg.

The case is U.S. v. Martoma, U.S. District Court, Southern District of New York, No. 12-cr-00973.

(Reporting by Jonathan Stempel in New York; Additional reporting by Emily Flitter; Editing by Stephen Powell)

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