NEW YORK, N.Y. – Lawyers for a former portfolio manager say prosecutors’ recommendation that he serve up to 20 years in prison for insider trading is “outrageous” and “irrational.”
Mathew Martoma’s lawyers said in papers filed late Tuesday that a judge at his sentencing next month would have to believe Martoma teamed up with his billionaire boss, Steven A. Cohen, to conclude he deserves such stiff punishment.
The Probation Department recommended Martoma receive from 15.7 to 19.6 years in prison, which would be greater than the record dozen years a former attorney received in Newark, N.J., after he admitted giving secrets during a 17-year insider trading scheme.
“With all due respect, a sentence in that range in this case would be outrageous,” the lawyers said. “We respectfully submit that Probation’s guideline range is irrational.”
The lawyers said the government never proved Martoma provided Cohen with inside information and he should face less time in prison than others serving two-and three-year sentences.
Cohen has not been criminally charged, but the Securities and Exchange Commission has accused him in a civil action of failing to prevent insider trading at his company, SAC Capital Advisors. He has disputed the allegations.
SAC Capital pleaded guilty in November to fraud charges and agreed to pay $1.8 billion to settle charges that it allowed, if not encouraged, insider trading for more than a decade.
Martoma was convicted in February of securities fraud and conspiracy, becoming the eighth portfolio manager or research analyst at the Stamford, Connecticut-based firm to be convicted or plead guilty to criminal charges in an insider trading case.
During a monthlong trial, two prominent doctors confessed to revealing secrets to Martoma in the summer of 2008 about the testing of a potential breakthrough Alzheimer’s drug.
The government has claimed the secrets enabled the company to earn more than a quarter-billion dollars illegally.
In their papers, Martoma’s lawyers said the Probation Department recommendation unfairly holds Martoma responsible for all of the company’s trades involving the pharmaceutical companies sponsoring the drug trial.
The lawyers wrote that the recommendation was “simply irrational and disconnected from other recent insider trading cases where there was far greater culpability.”