NEW YORK, N.Y. – An Alzheimer’s expert testified Tuesday that he was too ashamed to be truthful when the FBI confronted him with claims he fed inside information to a hedge fund manager whose company owned pharmaceutical stocks.
Sidney Gilman, 81, described his dealings with investigators to a New York City jury at the trial of former SAC Capital portfolio manager Mathew Martoma.
During two days of testimony, Gilman has described feeding secrets about a clinical trial for a promising Alzheimer’s drug to Martoma, 39, of Boca Raton, Fla.
The doctor said he was “hoping it would go away” when he lied to the FBI in 2011.
“I was intensely ashamed,” he said. “I had betrayed my colleagues, myself and my university. I was so ashamed.”
He eventually signed a non-prosecution agreement and agreed to testify against Martoma, who is accused of passing along inside information to his colleagues that enabled SAC Capital to earn a quarter billion dollars illegally. The Stamford, Conn.-based SAC Capital is owned by billionaire Steven A. Cohen. SAC Capital has pleaded guilty to fraud charges and agreed to pay $1.8 billion.
Martoma has pleaded not guilty and his lawyers have said the company’s decision to sell its position in pharmaceutical companies funding the Alzheimer’s drug trial was smart because the bloated stocks were poised to fall regardless of the trial results.
Gilman was a professor of neurology at the University of Michigan Medical School when the FBI interviewed him. He said he retired from teaching more than a year ago so he would not be fired.
He said he lied during an interview with the Securities and Exchange Commission in February 2012 before telling the truth in a follow up interview with the FBI in the summer of 2012.
“I told the government that I had provided inside information to Mr. Martoma in detail, repeatedly,” he said. “I expected I would face criminal prosecution.”
Prosecutors have portrayed Gilman as critical to the insider trading scheme, saying his position on the drug trial’s safety monitoring committee gave him early access to the results, even before he was designated as the person who would deliver them publicly in 2008.
Gilman testified he was “initially euphoric” when he saw the results of the trial and shared information only with his wife and Martoma. A defence lawyer at opening statements earlier in January had said Martoma would have been buying rather than selling if he was basing his trades on what Gilman told him.
A prosecutor asked Gilman if he shared inside information with other financial professionals during consultations that earned him almost as much as his $210,000 teaching salary in 2008.
“Perhaps unintentionally. I may have slipped here and there,” Gilman said.