BBC News, 20
November 2012
The alleged insider trading involved information about the results of drug trials |
A former
hedge fund manager has been charged with what prosecutors say could be the most
lucrative insider trading case in US history.
Mathew
Martoma was accused of making $276m (£174m) for his firm, using information about
drug trials that had not yet been published.
The doctor
who gave him the information is co-operating with authorities.
Mr
Martoma's lawyer said his client was confident that he would be cleared of the
charges.
The money
was allegedly made on trading in two companies, Elan and Wyeth, which were
conducting trials of Alzheimer's drugs.
The
complaint was filed in the federal court in Manhattan.
Mr Martoma,
who worked for CR Intrinsic Investors, was arrested on Tuesday morning in Boca
Raton, Florida, according to the FBI.
"As
Martoma allegedly got sneak peeks at drug data, he first recommended that the
hedge fund build up a massive position in Elan and Wyeth stock, and then caused
the fund to shed those shares after getting a secret look at the unexpectedly
bad results of a clinical drug trial," Manhattan US Attorney Preet Bharara
said in a statement.
"As a
result of the blatant corruption of both the drug research and securities
markets alleged, the hedge fund made profits and avoided losses of a staggering
$276m, and Martoma himself walked away with a $9m bonus for his efforts."
But Mr
Martoma's lawyer, Charles Stillman, said his client was "an exceptional
portfolio manager who succeeded through hard work and the dogged pursuit of
information in the public domain".
"What
happened today is only the beginning of a process that we are confident will
lead to Mr Martoma's full exoneration," he said.
The
Securities and Exchange Commission (SEC) also filed a civil case against CR
Intrinsic Investors, Mathew Martoma and Dr Sidney Gilman.
The civil
complaint said that the money was made in July 2008 ahead of a negative public
announcement about the clinical trial results of an Alzheimer drug being
jointly developed by Elan and Wyeth.
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