Ex-SAC manager granted $5 million bail in insider-trading case

NEW YORK, Mon Nov 26, 2012 – A former SAC Capital portfolio manager was released on $5 million bail on Monday after making his first appearance in a New York court on charges of making illegal trades that hedge fund titan Steven A. Cohen personally signed off on.

Mathew Martoma, 38, of Boca Raton, Fla., was charged last week in what U.S. prosecutors called “the most lucrative” insider-trading scheme ever.

Martoma was accused of helping Cohen’s firm avoid losses and reap profits totaling $276 million in the summer of 2008 by using insider tips he obtained from a doctor about Elan Corp and Wyeth LLC. Martoma worked for CR Intrinsic, a unit of Cohen’s SAC Capital.

Cohen was not charged with wrongdoing, but prosecutors have said in court papers that the “owner” of the hedge fund signed off on Martoma’s recommendation to sell the shares of Elan and Wyeth. A spokesman for SAC Capital said last week that “Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government’s inquiry.”

At Monday’s 13-minute hearing in U.S. district court in Manhattan, Martoma spoke only once, answering “yes, your honor” to a judge’s question. He did not enter a plea.

Martoma’s lawyer, Charles Stillman, last week said that his client was an “exceptional portfolio manager” and he is confident Martoma will be exonerated.

Magistrate Judge James Cott on Monday agreed to a proposed $5 million bail package for Martoma, who has been free on similar bail conditions since making an initial court appearance in a Florida court after his arrest on Nov. 20.

Hedge fund manager charged with insider trading

NEW YORK – A California-based hedge fund manager surrendered to FBI agents on insider-trading charges on Friday, the latest in a series of cases brought by the U.S. government in recent years against money managers and traders.

An FBI spokesman said an indictment would be unsealed later on Friday in federal court in New York outlining the charges against Doug Whitman, the founder of Whitman Capital in Menlo Park, Calif. The hedge fund’s website describes it as a private partnership focused on the technology industry.

Whitman denies that he traded on the basis of unlawfully obtained inside information, his lawyer said in a statement. The lawyer, David Anderson of Sidley Austin LLP, said Whitman had cooperated with the government’s investigation.

“Mr. Whitman did not pay any insiders or provide any personal benefit to any insiders for inside information,” the statement said.

Anderson said the charges were based on information provided to investigators by two traders, Roomy Khan and Karl Motey, who have pleaded guilty to insider trading and conspiracy charges.

“Their claims are false and will be proved false.”

A spokeswoman for the office of the Manhattan U.S. Attorney declined comment because the indictment was not yet public.

Dozens of hedge fund managers, traders, consultants, lawyers and executives have been charged since 2009 in a sweep by federal authorities to stop money managers from gaining an illegal edge in the market with inside information.