Former SAC Capital Advisors portfolio manager Mathew Martoma has been found guilty of three counts of insider trading, in a case described as one of the largest insider-trading prosecutions thus far.
A Manhattan jury found him guilty Thursday on illegal trades on two pharmaceutical companies that left SAC and its traders $276 million ahead.
Sidney Gilman, an 81-year-old former professor of neurology at the University of Michigan Medical School, testified that he gave Martoma the secret and disappointing results of an Alzheimer's drug trial sponsored by drug makers Elan Corp. and Wyeth nearly two weeks before they were publicly announced.
The prosecution said Martoma and SAC Capital then began selling all their shares in Elan and Wyeth and building a short position that would make millions of dollars when the stock of both companies plummeted following the public announcement of the drug trial's results.
Martoma, 39, could face up to 20 years in jail.
The prosecution was led by New York Attorney-General Preet Bharara, who has won a string of cases involving insider trading in recent years.
"Cheating may have been profitable for Martoma, but in the end, it made him a convicted felon," Bharara said in a statement.
In November, SAC struck a deal with federal prosecutors to resolve criminal charges against the firm, pleading guilty to insider trading and agreeing to pay about $1.8 billion in new penalties. Eight current or former employees at the firm, including Martoma, have pleaded guilty to or been convicted of criminal insider-trading charges.
Martoma fainted in his back yard when federal agents arrived at his home in late 2011, according to court documents.
But he disappointed prosecutors who hoped he would implicate SAC founder Steven Cohen. Instead of a plea deal, Martoma opted for a jury trial, which lasted three weeks.