A former SAC Capital Advisors LP portfolio manager charged in what prosecutors called the biggest insider-trading scheme in history was given permission by a judge to travel to Chicago to attend his uncle’s funeral.
Nathaniel Marmur, a lawyer for defendant Mathew Martoma, said in a letter to the court yesterday that his client was seeking a temporary modification of his bail conditions to permit him to travel with his family on Feb. 23 through Feb. 26 to attend the funeral.
U.S. District Court Judge Kimba Wood, who was handling emergency matters, granted Martoma’s request.
When Martoma made his first appearance in Manhattan federal court in November, U.S. Magistrate Judge James Cott released him on a $5 million personal recognizance bond. Cott directed Martoma to surrender his passport and those of his children and restricted his travel to the Southern and Eastern Districts of New York, Massachusetts, New Jersey and Florida, where he lives.
Marmur said yesterday that prosecutors and U.S. court officials didn’t object to Martoma’s request.
Martoma has pleaded not guilty to one count of conspiracy and two counts of securities fraud. Prosecutors say he used inside information about a clinical drug trial to help SAC make $276 million in profits and averted losses through trades in Elan Corp. (ELN:US) and Wyeth LLC.
Prosecutors said in an indictment filed Dec. 21 that Martoma illegally used tips from a physician who was in charge of monitoring the tests’ safety. Martoma advised a “hedge fund owner,” unidentified in the indictment, to trade in Elan and Wyeth, the government alleged.
A person familiar with the case said Steven A. Cohen, SAC’s founder, is the hedge fund owner referred to.
SAC bought shares of Elan and Wyeth, which were promoting bapineuzumab, or bapi, a drug intended to treat Alzheimer’s disease, based on positive safety data from the tests, the government said.
Later, when Martoma learned the companies would report negative data on the drug, Martoma had a 20-minute phone call with Cohen, according to the government.
SAC began liquidating its $700 million position in Elan and Wyeth the day after the call, the government said. SAC then profited by taking short positions in the stock, prosecutors said.
Jonathan Gasthalter, a spokesman for Stamford, Connecticut- based SAC, has said Cohen and SAC acted appropriately in making the trades. Cohen hasn’t been charged criminally or sued by regulators in the case.
The case is U.S. v. Martoma, 12-cr-00973, U.S. District Court, Southern District of New York (Manhattan).
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