SAC insider trading trial begins in US

A trial starting this week over what US prosecutors call the most lucrative insider trading scheme ever will likely delve into the trading activity of Steven Cohen, founder of the SAC Capital Advisors hedge fund.

Mathew Martoma, a former SAC portfolio manager, is charged with using confidential information provided by two doctors involved in clinical trials to trade in drug firms Elan and Wyeth, which is now owned by Pfizer.

Crackdown
The trial is part of a crackdown on insider trading by federal prosecutors in New York. Since October 2009, 78 people have either pleaded guilty or been convicted in an unbroken winning streak for prosecutors at trial.

Much of the investigation has centred on improper trading activities at SAC Capital, where eight current or former employees, including Mr Martoma, have been criminally charged.

In papers filed in court ahead of his trial, prosecutors charge that in 2008 SAC began selling off a $700 million position in Elan and Wyeth – mostly held in Mr Cohen’s own accounts – and placed bets against the companies after Mr Martoma received tips from the doctors.

The hedge fund made profits and avoided losses amounting to $276 million, the prosecutors said.

– (Reuters)