Indo American Found Guilty Of insider Trading Faces 45 Years In Jail

NEW YORK – A Manhattan jury onThursday convicted Indo-Americanportfolio manager Mathew Martoma ofinsider trading in a case described as themost lucrative scam ever busted.His firm, the once-iconic-but-nowdefuncthedge fund SAC Capital madeapproximately $275 million in profitsand avoided loses based oninsider informationobtained by him.The trade earned him aone-time bonus of $9 million.Martoma, 39, was convictedof one count ofconspiracy to commit afraud and two counts ofsecurities fraud, which could in all gethim a maximum jail term of 45 years,with fines.“In the short run, cheating may havebeen profitable for Martoma, but in theend, it made him a convicted felon” saidManhattan US attorney Preet Bharara,who prosecuted the case.Martoma was born Ajai MathewMariamdani Thomas in Michigan toparents from Kerala. Martoma — fromMar Thoma Syrian Church — is anadopted family name.As a portfolio manager at SAC startingin 2006, Martoma cultivated two physiciansconnected with a search forAlzheimer cure by Elan Corporationand Wyeth.The doctors, who cooperatedwith investigators later, kept himupdated with the latest on the drug trial,passing on confidential information inclear contravention of rules.The drug trials were closely watched notonly by the industry but also the market,with the stocks of the twocompanies involved in thetrial costly tied to the outcome.Starting later 2007, SACCapital started buyinghuge amounts of Elanand Wyeth shares basedon a tip Martoma gotfrom one of the doctors that the drugswere safe.“By the spring of 2008, SAC Capitalheld approximately $700 million worthof Elan and Wyeth equity securities,”said a statement from Bharara’s officeon Thursday.By the middle of 2008 thetrials were spewing nothing but badnews. The drug being tried on the volunteers— bapineuzumab — proved tobe a dud, completely ineffective.Martoma first heard of it around July17, 2008, from one of his two sources,who, fortuitously for him, had also beenentrusted with announcing the failure ofthe trial.