Former portfolio manager at hedge fund giant, SAC Capital, Mathew Martoma, has been sentenced to nine years in prison after being convicted for his role in the illegal insider trading scandal at the firm.
Earlier this year, Martoma, a former portfolio manager with CR Intrinsic Investors, LLC, a division of SAC Capital, was convicted of one count of conspiracy to commit securities fraud and two counts of securities fraud after a four-week jury trial presided over by U.S. district court judge, Paul Gardephe. Yesterday, September 8, he was sentenced in Manhattan federal court to nine years in prison and three years of supervised release. He was also ordered to forfeit to the US$9.3 million he received as a bonus, his interests in his home in Florida, and several bank accounts.
Judge Gardephe described Martoma’s conduct as, “deeply corrosive to our financial markets,” generating cynicism among investors.
U.S. authorities alleged that Martoma participated in the most lucrative insider trading scheme ever charged, which resulted in approximately US$275 million in illegal profits and avoided losses. Specifically, they alleged that he tapped into so-called “expert network” firms to try to get inside information on the outcome of confidential clinical trials for certain drugs.
“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. 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,” said U.S. attorney, Preet Bharara. “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.”