An affiliate of Stamford hedge fund SAC Capital and its former manager were charged in a $276 million insider trading case Tuesday and accused of acting undisclosed drug research.
The Wall Street Journal, citing anonymous sources, is reporting that Steven Cohen, founder and owner of SAC, is implicated in the allegations and was “integrally” involved.
At least five SAC managers or traders have been charged with insider trading in this case and previous ones, but Cohen, Connecticut’s wealthiest person, has never been implicated.
Mathew Martoma, 38, of Boca Raton, Fla., was portfolio manager of CR Intrinsic Investors LLC in Stamford until 2010. The alleged insider tip from Michigan neurology professor Sidney Gilman was perhaps “the most lucrative inside tip of all time,” a prosecutor said.
Gilman was overseeing trials of an Alzheimer’s drug for Elan and Wyeth, now owned by Pfizer. Martoma has bulked up on the stocks and when he learned in advance that the drug failed, he executed short sales, prosecutors charged.
The case reveals sleazy practices in the research business as well as on Wall Street, as Gilman was paid more than $100,000 by an “expert network” that connected him with Martoma, prosecutors said.
Gilman is cooperating with prosecutors.