Bloomberg News

SAC Capital Sued by Wyeth Investors in Tiping Claim

April 13, 2013

SAC Capital Advisors LP was sued by a public pension fund that holds shares of Wyeth LLC, now a unit of Pfizer Inc. (PFE:US), over alleged insider trading on tips about an Alzheimer’s drug.

Birmingham Retirement & Relief System sued SAC, its founder, Steven A. Cohen, and SAC units including CR Intrinsic Investors LLC, claiming damages for alleged illegal trading by the hedge fund in the drugmaker’s stock. Stamford, Connecticut- based SAC last month agreed to pay a record $602 million to settle insider-trading allegations filed by the Securities and Exchange Commission.

In the settlement, which must be approved by U.S. District Judge Victor Marrero, SAC didn’t admit or deny wrongdoing.

The Birmingham fund, in its complaint filed yesterday, seeks to represent a class of investors who bought Wyeth common stock in 2008 from July 21 to July 29.

The U.S. charged Mathew Martoma, a former CR Intrinsic portfolio manager, with using illegal tips to help SAC make profits or avoid losses totaling $276 million by trading in Elan Corp. (ELN:US) and Wyeth LLC. Prosecutors said the case is the biggest insider trading scheme in history. Martoma has pleaded not guilty.

‘Fund Owner’

Martoma, according to a Dec. 21 indictment against him, used tips from a physician who was in charge of monitoring the safety of a drug undergoing clinical tests to advise an unnamed “hedge fund owner” to trade in Elan and Wyeth stock. A person familiar with the case said Cohen is that hedge fund owner.

In addition to the SAC units and Cohen, the complaint names as defendants Martoma and Sidney Gilman, the doctor who allegedly passed him the drug-trial information. The suit filed on behalf of Wyeth shareholders follows at least two that have been filed against SAC by holders of Elan shares.

“Any liability to these plaintiffs is fully discharged by our settlement with the SEC, and this lawsuit presents no new liability to SAC,” Jonathan Gasthalter, an SAC spokesman at Sard Verbinnen & Co., said yesterday in an e-mailed statement.

The case is Birmingham Retirement and Relief System v. SAC Capital Advisors LLC, 13-cv-02459, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • PFE
    (Pfizer Inc)
    • $31.94 USD
    • -0.03
    • -0.09%
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