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Health and Healthcare

Criminal Charges in Drug Insider Trading Scheme

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By Paul Ausick Published
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The U.S. Securities and Exchange Commission (SEC) today filed criminal charges against a former SAC Capital Advisors hedge-fund manager related to an insider trading scheme that generated profits and avoided losses of $276 million related to a failed drug trial. The manager purchased and later sold shares in Elan Corp. (NYSE: ELN) and Pfizer Inc. (NYSE: PFE) after receiving information from a consultant ahead of public announcements first touting, then providing negative information related to an Alzheimer drug treatment.

The manager, Mathew Martoma, has been charged with conspiracy to commit securities fraud and two counts of securities fraud, and faces up to 60 years in prison if convicted.

The SEC is also suing investors in CR Intrinsic, the subsidiary of SAC Capital Advisors that Martoma worked for, and a University of Michigan professor who provided Martoma with the insider information. The professor has a non-prosecution deal with the U.S. Attorney’s office and has been cooperating with the government during the investigation.

Paul Ausick

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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