(Bloomberg) — Prosecutors in the insider-trading trial of a former SAC Capital Advisors LP fund manager can tell jurors that he was greedy, not that he fainted in front of FBI agents or was fired from his job, a judge ruled.
Mathew Martoma, who begins trial tomorrow in what the government called the most lucrative insider-trading scheme ever charged, won several rulings limiting the evidence prosecutors may use to try to prove he made $276 million for SAC based on inside information obtained from two doctors supervising a clinical drug trial.
U.S. District Judge Paul Gardephe in Manhattan, whos overseeing the case, agreed with Martoma that jurors shouldnt learn that he fainted in the front yard of his Boca Raton, Florida, home when confronted by two agents from the Federal Bureau of Investigation in 2011. Prosecutors argued the fainting spell is evidence Martoma knew he was guilty.
When an individual who works in the hedge fund industry is approached by the FBI and is accused of having engaged in insider trading in specific stocks and while employed at a specific company, it is likely to be a shocking and highly disturbing event, whether the person is innocent or guilty, Gardephe said in a written ruling today.
Gardephe also ruled today that prosecutors cant tell the jury Martoma was fired for poor performance in 2010, two years after earning a $9.3 million bonus for the alleged insider trades, in the shares of Wyeth and Elan Corp. He granted Martomas request to bar evidence that he instructed a research analyst to travel to a city on the pretext that she happened to be in town due to unrelated matters to question a doctor about a recent drug trial. The analyst, doctor and city werent identified.
During a conference this morning, Gardephe brushed aside arguments from Martomas lawyer, Richard Strassberg, that the government shouldnt be allowed to tap into the anger thats out there against Wall Street, by arguing that the alleged crime was motivated by greed.
Its entirely appropriate for the government to comment on that, Gardephe said.
The case is U.S. v. Steinberg, 12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).