A former portfolio manager with SAC Capital Advisers has been sentenced to nine years in jail for insider trading.
Mathew Martoma is the seventh former employee of SAC to be convicted and received the longest sentence. He was found guilty in February of making $275 million for SAC through insider trading relating to two pharmaceuticals stocks.
He plans to appeal the sentence, according to Bloomberg.
Sentencing Martoma in Manhattan yesterday, District Judge Paul Gardephe said the lengthy sentence was driven by the scale of the gains made from the illegal trades. On top of the $275 million made for SAC, Martoma was given a $9.4 million bonus linked to the trades. He has been ordered to forfeit this amount.
The case forms part of a wider insider trading investigation by Manhattan Attorney Preet Bharara into insider trading at hedge funds, which has so far resulted in 81 convictions. Of those convicted, only two have received longer sentences than Martoma—one of them is Raj Rajaratnam, founder of Galleon Group, who was sentenced to 11 years in jail in October 2011.
In a statement, Bharara said: “Today’s sentence of a lengthy prison term is well-suited to the audacity of the illegal trading in this case. The long and short of Mathew Martoma’s trading is that he traded his liberty, his name, and his time with his family for what in the end is nothing.”
SAC Capital Advisors rebranded as Point72 Asset Management in March this year, after agreeing to pay $1.8 billion and plead guilty to charges including securities fraud as part of a settlement with the US Securities and Exchange Commission (SEC). It slashed its staff numbers from 3,000 to 850, and three senior staff, including President Tom Conheeney and Chief Compliance Officer Steve Kessler, have left the firm this year.
Founder and CEO Steven Cohen is also subject to an administrative proceeding from the SEC, accused of failing to supervise his employees. He has not been charged with any crime.
The SEC announced in July that it was investigating 44 investment firms for alleged insider trading activities in a separate operation.