Recently portfolio manager Mathew Martoma, was sentenced to nine years in prison – marking one of the longest prison sentences to be handed out for a white-collar crime.
Insider Trading is White Collar Crime
Earlier this year, Martoma, 40, who worked for SAC Capital Advisors hedge firm fund, was found guilty of an insider-trading conviction for trading on non-public information about a development of an Alzheimer’s drug. The insider information he received from a doctor allowed him to make more than $200 million in profits for SAC Capital. Martoma also pocketed $9 million in bonuses. His nine-year prison sentence also came with an order to pay back his $9.38 million in bonuses.
Building a Case Against Steve Cohen
Billionaire Steve Cohen owns the SAC Capital Advisors hedge fund firm that employed Martoma. This case is an attempt by federal prosecutors to build a case against Cohen. While several other individuals that are affiliated to SAC Capital have been convicted of white collar crimes, as part of a large insider-trading investigation of SAC Capital led by federal prosecutors, the prosecutors have yet to accumulate enough evidence to directly target Cohen.
Decision to Fight Federal Prosecutors
Rather than cooperating with federal prosecutors in their attempt to build a case against Cohen, Martoma, who was fired by SAC, decided to try to fight federal prosecutors in Manhattan, despite their already palpable success in prosecuting previous insider-trading cases. This is an especially confusing decision considering the evidence against Martoma was large. Prosecutors also attempted to get Martoma’s cooperation for months. In fact, it a held opinion that even if a settlement did not help the feds get Cohen, Martoma’s sentence could have been lessened simply due to the fact that it would have saved the prosecutors the trouble of going to trial against Martoma. Martoma will now have to deal with his decision to not help prosecutors, in addition to his decision to engage in insider-trading.
Source: Forbes, Mathew Martoma Sentenced To Nine Years For Insider Trading, September 8, 2014
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