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 Sidney Gilman, a retired doctor who is cooperating with prosecutors,
told jurors in New York federal court that he leaked confidential
information to Martoma about safety and efficacy of a drug under
development by Elan Corp Plc and Wyeth.
"I revealed information that was confidential about a clinical drug
trial to Mathew Martoma inappropriately," Gilman said.
Gilman, 81, is one of two doctors from whom prosecutors contend that
Martoma obtained information to advance a record-breaking insider
trading scheme.
His testimony is seen as key in securing the conviction of Martoma,
39, one of eight current or former employees of SAC Capital to be
charged with insider trading.
SAC Capital, a once $14 billion hedge fund owned by Steven A. Cohen,
has agreed to pay $1.8 billion in criminal and civil settlements and
plead guilty to fraud charges stemming from insider trading by its
employees.
FLIGHT TO MICHIGAN
Prosecutors said that from 2006 to 2008, Martoma obtained
confidential information from Gilman and another doctor, Joel Ross,
about a clinical trial underway for an Alzheimer's drug called
bapineuzumab being developed by Elan and Wyeth, now a unit of Pfizer
Inc.
They said that during this time, Gilman spoke with Martoma, a
portfolio manager at SAC's CR Intrinsic Investors, through a
so-called expert networking firm, Gerson Lehrman Group, and had more
than 40 paid consultations for which he earned more than $70,000.
Speaking slowly at times and wearing hearing aids, Gilman, an expert
in Alzheimer's disease, told jurors he chaired the safety monitoring
committee for the Phase II clinical trial.
He had been chosen by Elan to present the results of the study at a
Chicago conference on July 29, 2008.
But prosecutors said that 12 days earlier, on July 17, Gilman told
Martoma the final results of the trial.
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Prosecutors said that on July 19, a Saturday, Martoma flew to
Michigan to meet with Gilman in his office in Ann Arbor, and review
PowerPoint slides about the results.
They said that after returning home, Martoma on July 20 emailed
Cohen, and then spoke with him for 20 minutes.
It is not known what was said, but prosecutors said SAC on July 21
began selling off its $700 million position in Elan and Wyeth. When
the drug trial results were announced, SAC made profits and avoided
losses of $276 million, prosecutors said.
Lawyers for Martoma are expected to question Gilman's credibility
and recollection during cross-examination.
Cohen has not been criminally charged and has denied wrongdoing. The
U.S. Securities and Exchange Commission is seeking to bar Cohen from
the financial industry for failing to supervise Martoma and SAC
portfolio manager Michael Steinberg, who was convicted of insider
trading in December.
The case is U.S. v. Martoma, U.S. District Court, Southern District
of New York, 12-cr-00973.
(Reporting by Nate Raymond in New York;
editing by David Gregorio)
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