Insider trading suspect freed on bail
NEW YORK — A former hedge fund portfolio manager accused of enabling a quarter of a billion dollars in profits by passing along inside information in one of the largest insider trading fraud cases in history appeared in a Manhattan court for the first time Monday and was released on $5 million bail, though his movements were restricted.
Mathew Martoma, 38, of Boca Raton, Fla., was read his rights by U.S. Magistrate Judge James Cott, who agreed to impose a bail package that prosecutors and Martoma's lawyers had worked out after his initial court appearance in Florida last week. He had been free on $5 million bail in Florida as well. Martoma must post $2 million in cash or property by next week to satisfy bail requirements.
Martoma was arrested last week on charges that between 2006 and 2008, he helped engineer one of the largest insider trading frauds in history. Martoma worked with CR Intrinsic Investors, an affiliate of SAC Capital Advisors. Steven A. Cohen, one of the world's richest men, owns SAC.
Martoma was arrested on Nov. 20 in Florida. Prosecutors say he exploited an acquaintance with a medical school professor to get confidential, advance results from tests of an Alzheimer's disease drug.
They say he shared the information with others, enabling more than $276 million to be made illegally. The government said in court papers that he caused other investment advisers to buy shares in the drug companies, and then he and the others ditched their investments before the public found out about the drug trial's disappointing results, allowing them all to make big profits and avoid huge losses.
The FBI subpoenaed SAC and other influential hedge funds in November 2010.
SAC spokesman Jonathan Gasthalter has said the company and Cohen are cooperating with the inquiry and “are confident that they have acted appropriately.”