PFIZER INC The decision from U.S. District Judge Paul Gardephe, who oversaw the trial earlier this year, was in response to a request from Martoma and came ahead of his sentencing on Monday on conspiracy and securities fraud convictions.
A jury found Martoma, 40, guilty in February of engaging in what prosecutors claimed was the most lucrative insider trading scheme in history, enabling SAC to make profits and avoid losses of $275 million in trades in Elan Corp and Wyeth.
Elan was acquired last year by Perrigo Company Plc (>> Perrigo Company PLC), while Wyeth is now a unit of Pfizer Inc (>> Pfizer Inc.).
SAC itself pleaded guilty last year to insider trading and agreed to pay $1.8 billion to settle criminal and civil charges.
Martoma was convicted of trading on confidential tips from two doctors about a clinical trial for an Alzheimer's drug that was eventually deemed ineffective.
In addition to refusing to toss Martoma's conviction, Gardephe denied his request for a new trial. The judge rejected his contention that the key government witness – Sidney Gilman, a doctor who testified as part of a cooperation deal that he had given Martoma the clinical results – was unreliable.
"To the contrary, Dr. Gilman's account was – as to the key issues – supported by strong circumstantial evidence," Gardephe wrote.
Martoma also claimed the jury was tainted by widespread media reports regarding his expulsion from Harvard for doctoring a transcript.
But Gardephe said there was no evidence any juror had been exposed to that information.
Martoma's defense lawyer, Richard Strassberg, did not immediately respond to a request for comment.
Manhattan U.S. Attorney Preet Bharara has recommended a "substantial" prison term beyond the eight years recommended by probation officers, according to court filings.
An eight-year term would be among the stiffest insider trading penalties handed down in recent years. Lawyer Matthew Kluger received the longest U.S. insider trading sentence at 12 years after pleading guilty in 2011 to participating in a $37 million scheme.
Martoma is one of eight SAC employees to be convicted of insider trading. SAC's founder, Steven A. Cohen, has not been criminally charged.
The firm has changed its name to Point72 Asset Management and no longer manages outside money, instead focusing on Cohen's family fortune.
The case is U.S. v. Martoma, U.S. District Court for the Southern District, No. 12-973.
(Reporting by Joseph Ax; editing by Andrew Hay)
By Joseph Ax
