'It’s another step on the government’s march into Cohen’s office', Erik Gordon, a professor at the University of Michigan Law School and Ross School of Business, said in an e-mail after the indictment. 'Given the prosecutors’ success in getting convictions and serious jail sentences, it’s time for anyone at SAC who is connected with insider trading to start having nightmares'.
Bloomberg reports that at issue in the Martoma case is a 20-minute phone call prosecutors said he had with Cohen after allegedly receiving negative test results about a drug that was intended for use by Alzheimer’s patients. The day after the call, SAC liquidated a $700m position in Elan Corp. and Wyeth LLC, the companies that were promoting the drug.
The government claims SAC netted $276m in profits and averted losses in the Elan and Wyeth trades. Cohen isn’t alleged in Martoma’s indictment to have known Martoma had inside information. Prosecutors have made no claims about precisely what was said on the call.
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image: © Lisamarie Babik