A divided federal appeals court on Wednesday upheld the 2014 conviction of former SAC Capital Advisors LP portfolio manager Mathew Martoma for insider trading, after the U.S. Supreme Court made such cases easier to pursue.
In a 2-1 decision, the 2nd U.S. Circuit Court of Appeals in Manhattan rejected Martoma`s argument that the jury instructions were defective, and said prosecutors presented "overwhelming" evidence that at least one tipper received a financial benefit from giving Martoma confidential information.
Martoma, 43, who worked at SAC`s CR Intrinsic Investors unit, was convicted of receiving confidential tips from a Michigan doctor in 2008 about an Alzheimer`s drug trial, and netting $275 million of illegal gains from subsequent trades. He is serving a nine-year prison sentence.
Paul Clement, who argued Martoma`s appeal, was not immediately available for comment. A spokeswoman for Joon Kim, the acting U.S. Attorney in Manhattan, had no immediate comment.
Now known as Point72 Asset Management, SAC is the former hedge fund of billionaire Steven A. Cohen.
In 2013, SAC pleaded guilty to fraud in connection with alleged insider trading, including Martoma`s, and paid $1.8 billion in criminal and civil settlements with U.S. authorities. Cohen was not criminally charged.
Martoma`s February 2014 conviction predated two major insider trading rulings, leading to an unusual May reargument of his appeal.
The 2nd Circuit had said in a December 2014 ruling, U.S. v. Newman, that prosecutors needed to show tippers received a tangible benefit for providing insider information.
But last December, the U.S. Supreme Court decided, in U.S. v. Salman, the passing of such a benefit was not a necessity.
The logic of that decision "abrogated Newman`s `meaningfully close personal relationship` requirement" for insider trading, Chief Judge Robert Katzmann wrote for Wednesday`s majority.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)