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Rediff News  All News  » Business » Mathew Martoma could face 20 years in prison

Mathew Martoma could face 20 years in prison

February 11, 2014 12:03 IST

Image: Mathew Martoma exits Manhattan Federal court with his wife Rosemary.
Photographs: Reuters Yoshita Singh in New York

Indian-origin Mathew Martoma, convicted for his role in the most lucrative insider trading scheme in US history involving $275 million, will be sentenced in June and could face about 20 years in prison.

Martoma, 39, the former portfolio manager of CR Intrinsic Investors, a division of SAC Capital, was convicted of one count of conspiracy to commit securities fraud and two counts of securities fraud by a federal jury last week after a month-long trial.


Mathew Martoma could face 20 years in prison

Image: Mathew Martoma.
Photographs: Reuters

While the maximum prison sentence on all the three counts is 45 years, Martoma could face upto 15-20 years in prison based on federal sentencing guidelines, which will take into account the gains reaped by SAC from the trading. He also faces a fine of over $5 million on the charges.

US Judge Paul Gardephe said in an order on Friday that sentencing would take place on June 10 and Martoma has time till May 13 to submit any motion seeking a lenient sentence.


Mathew Martoma could face 20 years in prison

Image: Mathew Martoma and his wife Rosemary.
Photographs: Reuters

Any response by the government to Martoma's motion would be due by May 27.

Martoma's guilty verdict added to the unbroken record of 78 convictions secured by Manhattan federal prosecutor Preet Bharara in his crackdown on insider trading on Wall Street.

Martoma is the 79th person convicted of insider trading. Fifty-eight of the 79 individuals have been sentenced, including prominent Wall Street executives like ex-Goldman director Rajat Gupta and billionaire hedge fund founder Raj Rajaratnam.

Martoma's lawyer Richard Strassberg said after the verdict that he was "very disappointed" and plans to appeal.

Mathew Martoma could face 20 years in prison

Image: Matthew Martoma.
Photographs: Reuters

Martoma was found guilty of using non-public information that he received from a doctor on the clinical trial of an Alzheimer's disease drug to make profits and avoid losses for his hedge fund in an amount totaling $276 million.

Prosecutors are expected to seek the maximum prison term for Martoma, given the unprecedented scale of profits made and losses avoided with the insider trading.

Rajaratnam is serving an 11-year prison term for insider trading gains of over $60 million.

Prosecutors are also likely to point to Martoma's dishonesty in the past when in 1999, he was kicked out of Harvard for allegedly doctoring his law school transcript to try to gain a federal clerkship.

He had then changed his name from Ajai Mathew Thomas and was admitted to Stanford, where no one knew that he had been expelled from Harvard. His colleagues at SAC also did not know about's his expulsion from Harvard, a fact that he managed to hide for a very long time. 

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