U.S. Attorney Preet Bharara in Manhattan took a step closer to the billionaire on November 20th, when former SAC Capital portfolio manager Mathew Martoma was arrested on charges of using inside information to trade the stocks of drugmakers Elan Corp. and Wyeth LLC. Cohen sold the stocks after speaking with Martoma, according to prosecutors and an SEC complaint, the first time they had linked him to trades at the center of an insider case.
Bloomberg reports that the same day the SEC notified Stamford, Connecticut-based SAC Capital that it’s considering pursuing civil fraud claims against the $14bn firm related to Martoma’s trading, three people with knowledge of the matter said two days ago. It was another example of how the SEC and U.S. Attorney Preet Bharara have cooperated in their probe of insider trading that has led to more than 80 people, with prosecutors often going to court first.
'The U.S. attorney brought a case against Martoma to try to force him to cooperate against Cohen to the extent that there is a case against him', said Marc Powers, the leader of Baker & Hostetler LLP’s national litigation and regulatory enforcement practice in New York. 'The SEC is likely waiting to see if the U.S. attorney’s office is able to flip Martoma against Cohen before they provide Cohen with a Wells notice'.
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