Deposed hedge fund kingpin Steve Cohen won’t be testifying at the insider-trading trial of Mathew Martoma, his former portfolio manager — but his name and presence will be all over the courtroom.
The trial, where Martoma faces at least 15 years in prison if convicted, starts Tuesday in Manhattan federal court.
Defense lawyers want to use the testimony of Cohen, the founder of SAC Capital, to exonerate Martoma.
Cohen has become the unspoken witness in the Martoma case. On July 20, 2008, prosecutors allege, Martoma placed a 20-minute call to Cohen to alert him that an Alzheimer’s drug trial was going badly for two pharmaceutical companies, Elan and Wyeth.
Martoma got the illegal tip from a doctor involved in the trials, it is charged.
A day after the call, Cohen instructed his traders to sell, then short, shares of those companies, earning SAC $276 million.
The doctor who gave Martoma the illegal information has cut a deal with the government and will testify against him.
The case is considered among the strongest of the 78 insider-trading cases that US Attorney Preet Bharara has brought. So far he has won all of them.
The defense wants to introduce testimony of Cohen, made to regulators in May 2012 that would indicate his trading in the stocks in question was based not on Martoma’s info but on views of a former SAC trader.
The government has sought to exclude that, saying it is hearsay evidence and that Cohen can’t be cross-examined.
Cohen has indicated he would plead the Fifth if asked to testify.
Judge Gardephe said he would rule on allowing that testimony before the trial opens.
The judge has also thrown Team Martoma a few bones — ruling that prosecutors can’t tell the jury about Martoma fainting when approached by FBI agents at his Florida mansion or about his being fired by SAC in 2010.