Dr. Sidney Gilman was the “canary in the coal mine” for accused inside trader Mathew Martoma, prosecutors charged in closing arguments in federal court Monday.
By cultivating the respected neurologist, who was on the safety-monitoring committee for the Alzheimer drug trials being conducted by Elan and Wyeth, former SAC Capital Advisors portfolio manager Martoma could build up a big position in those stocks without worry, prosecutors argued.
That’s because Gilman would be the first to know if the drug was having any of the adverse side effects that killed its predecessor — and that would signal the accused to get out of the stock before anyone else found out.
Prosecutors pointed to document that showed Martoma spoke with Gilman for more than an hour after every safety-monitoring committee meeting over an 18-month stretch, enough time for Gilman to go through the PowerPoint slides.
In the end, the drug proved safe. The problem turned out to be that it was ineffective, and Martoma also learned that before anyone else, the government said.
Soon after receiving the alleged illegal tip on the drug trial results, SAC, owned by big name Wall Street trader Steve Cohen, transferred the Elan and Wyeth holdings into new portfolios that no one at the firm except for Martoma, Cohen and head trader Phil Villhauer knew about, the court was told.
Then, over the course of five days, SAC dumped the stocks.
While prosecutors made their final arguments, Martoma’s wife, Rosemary, sat in the front row behind her husband, casting a Mona Lisa-like smile toward the jury. For about 10 minutes, her body shook uncontrollably as she tapped her feet.
Martoma’s defense will present its closing arguments later Monday.