For renowned neuroscientist Dr. Sidney Gilman, it was either quit or be fired.
Gilman, the former chair of the neurology department at the University of Michigan Medical Center, and the government’s star witness against alleged inside trader Mathew Martoma, said Friday those were the only two choices he had in 2012 after it became known that he leaked secret drug-trial information to the former SAC Capital Advisors portfolio manager.
“I retired in 2012 rather than being fired,” Gilman told jurors in the federal insider-trading trial of Martoma. “I revealed confidential information about clinical diagnostic trials to Mathew Martoma inappropriately.”
The 81-year-old doctor, his hair white and demeanor bookish, took the stand at around 11 a.m. If his testimony goes as the prosecution hopes, by the time he steps down next week, Martoma’s future will be toast.
The ex-money man is facing at least 15 years in prison if convicted.
Gilman, who said he has published nine books and 240 articles in scientific publications on topics such as Alzheimer’s and Parkinson’s diseases, had a key role in a drug trial on an experimental Alzheimer’s drug being developed by pharma giants Elan and Wyeth.
Gilman was bound by confidentiality agreements not to release information about the drug trials to anyone. But the learned doctor was first befriended and then compromised by Martoma, prosecutors allege. Eventually, Gilman sold the trial results — that the drugs didn’t work — to Martoma several days before presenting them at an international conference.
The doctor received $186,000 from Gerson Lehrman Group, the expert network who connected him to Martoma, for the Élan and Wyeth information.
Dr. Gilman testified that he returned that money, with interest, to the Securities and Exchange Commission, which sued him for his role in the insider trading.
He is not being criminally prosecuted in exchange for his testimony.
For Martoma, the Gilman tip was worth its weight in gold. The former executive at SAC — the hedge fund owned by Steve Cohen — told colleagues at the Stamford, Conn., firm about the unsuccessful trials and by selling the pharma stock and shorting the shares was to make $276 million in profits and averted losses.
It was the most lucrative inside trade ever, the government alleges.
Gilman testified that he had an active consulting practice, speaking often with those in the financial industry. He told the Manhattan federal court jury he had not given the confidential Elan and Wyeth results to anyone but Martoma.
He added, “I can’t be positive,” when asked if he had breached his confidential agreements with any other individuals at other times. “I may have breached confidential agreements with others.”
Earlier testimony by an FBI agent indicated that since 2006, Martoma had placed dozens of calls to Gilman — with many of them lasting over an hour.