No immunity for SAC's Indian origin portfolio manager in fraud case

  • PTI, New York
  • |
  • Updated: Nov 05, 2013 14:48 IST

The USD 1.8 billion dollar settlement reached between federal prosecutors here and SAC capital advisors will not include any immunity for the hedge fund giant's Indian-origin portfolio manager who will go on trial for insider trading charges early next year.


Manhattan's India-born US Attorney Preet Bharara announced yesterday that SAC Management has agreed to plead guilty to fraud and insider trading charges and pay a USD 1.8 billion penalty besides agreeing to terminate SAC Capital's investment advisory business.

One of the key figures in the government's crackdown against SAC is the firm's former Indian-origin hedge fund portfolio manager Mathew Martoma who has been charged with insider trading.

Prosecutors allege that Martoma received confidential data from two doctors about drugs being developed by the pharmaceutical companies' Elan and Wyeth and trading on it.

Prosecutors contend that the tips Martoma received about clinical tests allowed SAC to earn profits and avoid losses totalling USD 276 million.

Judge Paul Gardephe of Federal district court in Manhattan has scheduled Martoma's trial for January 6.

Under the agreement reached with federal prosecutors, the SAC companies will plead guilty to each count in which they are charged with an indictment unsealed in July this year, charging the SAC Companies with securities fraud and wire fraud in connection with a large-scale insider trading scheme.

The agreement imposes a 'USD 1.8 billion financial penalty on the SAC Companies' probably the largest insider trading penalty in history.

This is split between a USD 900 million fine in the criminal case and a USD 900 million forfeiture judgement in a civil money laundering and forfeiture action filed by the government simultaneously with the criminal charges.

It also provides that the SAC Companies and their affiliates will no longer accept outside investor funds and will shut down operations as an investment adviser.

While the agreement would resolve the criminal charges against the SAC companies it does not provide "any individual with immunity from prosecution."

 

also read

TV ad shows Sikhs as vibrant part of US' cultural tapestry

blog comments powered by Disqus