Accused inside-trader Mathew Martoma was like a shark sizing up its prey.
Over the course of two years, the former SAC Capital Advisors portfolio manager slowly closed in on Dr. Sidney Gilman, who was involved in clinical trials on Alzheimer’s drugs, prosecutors allege.
Martoma lavished Gilman with compliments on his teaching abilities, took him to lunch at SAC’s Manhattan offices and, after the doctor missed a scheduled phone call, told the 81-year-old neurologist he was concerned for his well-being, Gilman testified Friday.
“He said he was worried about me,” Gilman told the Manhattan federal court jury, recollecting Martoma’s conversation when the two finally caught up.
I thought it was very touching,” Gilman said.
While outwardly friendly and doting on Gilman, Martoma was really just after secret data on how the drug trials were going, it is alleged.
Gilman, who knew it would violate his confidentiality agreements to disclose how the secret trials were going, eventually succumbed to Martoma’s kind gestures and leaked confidential results.
Gilman, who is the government’s star witness in its case against Martoma, told the jury that while he consulted with hundreds of other hedge fund managers as an expert affiliated with Gerson Lehrman Group — where he raked in more than $100,000 per year in consulting fees, in addition to his $300,000-a-year salary as the head of the University of Michigan Medical Center — his favorite was the 9-year-old money man.
The doctor said he developed a special bond with Martoma, whom he considered a “very bright” person who asked “perceptive questions.”
As their relationship grew, Martoma even told Gilman he wanted to be friends. “He said that several times,” said Gilman.
The flattery certainly worked.
When, in 2006, early in their relationship, Martoma asked for specific information about side effects of a drug that was in clinical trials, Gilman was monitoring, the doctor testified, he told Martoma, “I can’t tell you that. ”
Eventually he relented.
Martoma was pressing him for information and Gilman, who was caught off guard, said, “I slipped and told him the side effects.”
Soon after that, Gilman testified that he was “sharing freely” everything he knew, including dates of meetings on the safety results Gilman attended.
After the meetings, he would talk to Martoma.
“I read to him the slides,” he said, explaining that Martoma wanted detailed information and would ask him to slow down so he could write down all the information.
The government alleges that eventually, in July 2008, Gilman gave results that the drug wasn’t working to Martoma several days before Gilman was scheduled to present them at an international conference.
Martoma’s employer, SAC, traded on that information and subsequently made $276 million in profits and averted losses, it is alleged.
It is the most profitable single trade based on inside information, the government claims.
Gilman is not being criminally prosecuted in exchange for his testimony.
The doctor is scheduled to continue his testimony on Tuesday.
Martoma faces at least 15 years in prison if he is convicted