A former hedge fund portfolio manager charged with carrying out a record-setting insider trading scheme was accused in a rewritten indictment Thursday of trying to corrupt over 20 doctors into providing an inside edge on a secret clinical trial.
The superseding indictment in U.S. District Court in Manhattan said Mathew Martoma succeeded in getting at least two doctors to provide illegal information in a scheme that stretched from 2006 to 2008 while he worked at SAC Capital Advisors. The Boca Raton, Fla., man has pleaded not guilty to conspiracy and securities fraud and is scheduled to appear in court Friday. He is free on bail.
Martoma was arrested in November on charges he persuaded a medical professor to leak secret data from an Alzheimer's disease trial. Prosecutors said the inside information enabled other investment professionals at the hedge fund founded by Steven A. Cohen to earn a quarter-billion dollars illegally.
In the latest copy of the indictment, prosecutors say Martoma also got information from a second medical doctor who was a clinical investigator for the drug trial. The indictment said the doctor, identified in court papers only as "Doctor-2," treated Alzheimer's patients with a drug and then monitored the mental and physical condition of the patients afterward.
The indictment said Martoma was new to the hedge fund when he emailed a list of doctors serving as clinical investigators on the drug trial to an expert networking firm, asking the firm to try to arrange consultations with them. According to the indictment, an employee of the expert networking firm notified Martoma the next day that the nine clinical investigators who had responded to the firm's inquiry had all declined the proposed consultation, citing a "conflict of interest."
Still, the indictment said, Martoma was ultimately able to arrange through the firm and other channels to get paid consultations with multiple doctors with access to confidential information about the drug trial, including the two doctors cited in court papers.
It said he had about 42 consultations with Dr. Sidney Gilman, who has been identified in court papers filed by the Securities and Exchange Commission. Gilman, a professor of neurology at the University of Michigan Medical School, served as chairman of a safety committee overseeing the clinical trial. Gilman was selected by Elan and Wyeth to present the final clinical trial results at a July 29, 2008, medical conference.
The indictment said Martoma exploited his personal and financial relationship with the doctor to gain inside information about the drug trial. It said the second doctor provided confidential information about the trial and other Alzheimer's disease drug trials with the expectation that Martoma would assist the doctor in obtaining additional clinical trial business.
The indictment said Martoma traveled from New York City to Ann Arbor, Mich., to meet with Gilman 10 days before the trial results were publically announced.
Martoma's lawyer, Richard Strassberg, declined comment Thursday.