MANHATTAN (CN) - A former S.A.C. Capital executive whose $276 million insider-trading scheme involved an Alzheimer's drug cannot upend his conviction, a federal judge ruled Thursday.
Jurors at the trial
of Mathew Martoma earlier this year heard testimony from Dr. Sidney Gilman, a neurology professor at University of Michigan Medical School, and Dr. Joel Ross, a New Jersey geriatrician, that they gave Martoma inside information about the negative results of a certain clinical trial anti-Alzheimer's drug bapineuzumab.
Wyeth and Elan Corp. were jointly developing bapineuzumab as a treatment for Alzheimer's, and Gilman served as the chairman of the Safety Monitoring Committee overseeing the clinical trial.
Martoma's hedge fund S.A.C. shorted Elan and Wyeth securities before the news about the clinical trial hit the market.
The Securities and Exchange Commission set sights
on Martoma in November 2012, and the portfolio manager was indicted the next year.
A federal jury convicted on all three charges against him in February.
Dismissing Martoma's bid for a retrial, U.S. District Judge Paul Gardephe wrote that the "evidence at trial overwhelmingly demonstrated Martoma's guilt."
The judge bristled at one of the arguments Martoma advanced to shake off his convictions.
"In his reply brief, Martoma argues - for the first time - that the government has not demonstrated that his charged conduct was 'in connection with' the purchase or sale of Elan or Wyeth securities, because there are 'no victims' of his crime," the 27-page opinion states. "This argument ignores the purpose of this nation's insider trading laws."
Gardephe found Martoma's argument "as astounding as it is meritless."
"While Martoma and SAC Capital were able to make profits and avoid losses totaling $275 million because of the inside information Martoma had wrongfully obtained, countless other investors who were not privy to this information were forced to bear the full brunt of the steep declines in Elan and Wyeth stock prices, once the final efficacy data from the bapineuzumab clinical study was made publicly available," he wrote.
The judge was similarly unmoved by arguments that the court tainted the jury in unsealing motions that revealed Harvard Law School had expelled Martoma.
Martoma forged a law school transcript to secure a clerkship with federal judges and falsified evidence considered at Harvard's disciplinary proceedings against him, prosecutors said in a pretrial motion.
The government considered bringing up the topic at trial to demonstrate Martoma's computer skills, but ultimately decided against it.
Calling his expulsion a "source of great embarrassment," Martoma had fought against unsealing the pretrial motions up to an appeals court, but he lost that battle.
Gardephe said Thursday that Martoma offered "no factual or legal support for this argument" that the information made the jury "presumptively biased" against him.
"There is no evidence that any juror was ever exposed to these materials," he added.
Prosecutors will seek to lock up Martoma for at least eight years at his Sept. 8 sentencing.
Martoma's attorney Charles Stillman with Ballard Spahr Stillman & Friedman declined to comment on the ruling.