“We have been remarkably successful in convincing persons to cooperate with the government, and provide evidence to us, and in court of law,” SEC director of enforcement Robert Khuzami said during a press conference the day the government went public with its charges of insider trading against former SAC Capital employee Mathew Martoma. To the untrained ear, Khuzami probably appeared to be speaking to no one in particular, just sending a general message to any would-be criminals out there that once the government got to their co-conspirators, it’d be all over. No one wants to do time, and everybody flips. To those who’ve been following Operations Perfect Hedge, though, and have watched the Feds’ relentless pursuit of Steven A. Cohen,  it was obvious they were sending a clear and direct message to the Big Guy: “We got ya boy, and ya goin’ down.” And since its track record of getting people to turn on their colleagues and in some cases, their best friends (see: Noah Freeman/Donald Longueuil, and these guys, and these guys, and this guy), really has been “remarkably successful,” and since Martoma has a wife and young kids and his whole life ahead of him, Khuzami and Co. probably assumed they had this one in the bag. But not so.

So far, Martoma has declined to cooperate at every opportunity, and time is running out for him to do so…The fact that Martoma, a 38-year-old father of three young children, has held out so far is baffling to authorities, according to the person familiar with the investigation.

You can imagine how upsetting this must be to the people who thought Martoma was going to be their ticket to nailing the Big Kahuna. Confusing, too. Fox Business reporter Charles Gasparino thinks the fact that SAC is covering Martoma’s legal bills may have something to do with it. Others believe it may be simply of case of the ex-CR Intrinsic trader not having anything useful on the BG. A couple other theories that account for Martoma’s loyalty, for those searching for answers, include:

1. He’s been plotting a way back into the Big Guy’s good graces for two years. This is his chance. (“I’m going to go to jail for Steve Cohen.”)

2. The SAC alumni newsletter* Martoma can’t get out of his head, sent the day the charges dropped, that had an item reminding people Cohen had commissioned a new “mammal in formaldehyde” by Damien Hirst and that they were still on the hunt for “the perfect subject.”

3. The termination agreement Martoma signed when he left SAC that says if he flips, he has to spend an hour in a windowless conference room with Ping Jiang.

Why Hasn’t Ex-SAC Capital Manager Mathew Martoma Turned on Steve Cohen? [BusinessWeek]
*Pretty typical in that it includes Class Notes and a Spotlight column featuring one noteworthy alum and what he’s been up to. Ex: “Don Longueuil recently pleaded guilty to fraud and is on his way to a federal prison. He looks forward to seeing all of his Stamford buddies when he gets out.”

34 comments (hidden to protect delicate sensibilities)
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Comments (34)

  1. Posted by InfiniteGuest | December 14, 2012 at 1:07 PM

    Unlike Dr. Gilman, Mr. Martoma won't be offered immunity. Why should he snitch?

  2. Posted by guest | December 14, 2012 at 1:09 PM

    B/c he would be offered SOMETHING if he helped them get Cohen. Less jail time is better than lots of jail time.

  3. Posted by guest | December 14, 2012 at 1:12 PM

    Definitely 3.

  4. Posted by Preet Bharara | December 14, 2012 at 1:18 PM

    You see, there are few standup guys in white collar crime. In blue collar crime, if your partners in crime think you might flip on them, they'll kill you just to be sure. So it's very important to convince your partners in crime that you're not a rat if you want to keep breathing. The problem with being a standup guy, though, is that standup guys do time. White collar criminals are pussies, though, they don't have the stones to actually blow somebody away.

    If Martoma isn't rolling over on Stevie, Stevie must have something pretty heavy to hold over his head, like pictures of him in bed with a live man, or a dead woman.

  5. Posted by InfiniteGuest | December 14, 2012 at 1:22 PM

    He gets a guaranteed stiff sentence for pleading guilty or a somewhat stiffer sentence for being found guilty.

  6. Posted by Patricia Cohen | December 14, 2012 at 1:24 PM

    If he flips, it says in his contract I can get nudie Martoma playing cards, for starters.

  7. Posted by Guest | December 14, 2012 at 1:32 PM

    SC promised to cast him on a Bollywood movie upon his release.

  8. Posted by Guest | December 14, 2012 at 1:35 PM

    You only go to jail if you want to go to jail. He probably wants to go to jail to get away from his wife.

    -Henry Hill

  9. Posted by Robert Tupilo | December 14, 2012 at 1:39 PM

    Put Martoma in jail for 15 years and wait for the next fish to come along. There will be plenty.

  10. Posted by St. Copious | December 14, 2012 at 1:49 PM

    Possibility #4: It has been communicated to Martoma that if he keeps quiet he and his family will be financially set for life, courtesy of a certain hedge fund manager who can afford to make such promises. If he flips he gets a shorter sentence but also probably gets fined into bankruptcy, which won't be fun for his wife and three kids while he's serving his sentence, even if it is short(er).

  11. Posted by Jabroni | December 14, 2012 at 1:52 PM

    Worst comment ever.

  12. Posted by surprised bro | December 14, 2012 at 2:02 PM

    damn.. i really thought this bird was gonna sing

  13. Posted by Guest | December 14, 2012 at 2:03 PM

    My condolences to those affected in Newtown. Time America bans assault rifles

  14. Posted by guest | December 14, 2012 at 2:13 PM

    This definitely seems like the appropriate place to leave that comment.

    -guy who feels for the families but also finds leaving that comment on a post about insider trading…off

  15. Posted by TheySayI'm Getting$ | December 14, 2012 at 2:17 PM

    Must be illuminati.

  16. Posted by Lowly Assistant | December 14, 2012 at 2:22 PM

    Going to jail for Steve Cohen > milkshake provider for Ken Griffin > guy that cuts KFC coupons for PTJ > tailor for Lloyd Blankfein.

    Suck on Martoma's prestige.

  17. Posted by The Town | December 14, 2012 at 2:22 PM

    I'm friends with the gahhhrdds up in Wahhhllpawl that'll make ya lives rip ass hell!

    -Fenway Pahhrk Money Counter

  18. Posted by el guesto | December 14, 2012 at 2:49 PM

    i believe the line is "… like pictures of him in bed with a dead woman or live boy". Other than that, no concerns.

  19. Posted by nycstatarb | December 14, 2012 at 2:50 PM

    Just seems obvious this must be what is going on. Hard to imagine any other reason for Martoma to be not flipping.

  20. Posted by TheDetailGuy | December 14, 2012 at 3:13 PM

    Never believe "Stick with me, you'll be set for life" from hedge fund managers.


  21. Posted by Guest | December 14, 2012 at 3:28 PM

    You wanted to link your FB to THAT comment?

  22. Posted by scott | December 14, 2012 at 3:28 PM

    Wicked good movie, wicked pissa

  23. Posted by Phil | December 14, 2012 at 3:32 PM

    You ungratefull for that lightsquared stock I gave you ya fcking pig?

  24. Posted by Guest | December 14, 2012 at 3:48 PM

    I do, Dr Robotnik is pure evil.


  25. Posted by Zoe Cruz | December 14, 2012 at 3:52 PM

    Hey !

  26. Posted by serious Q | December 14, 2012 at 4:11 PM

    But if a huge payment goes to the Martoma account, and all of a sudden the guy is living the private jet life, can't the feds come after him – isn't that payment bribery/illegal/corrupting a witness?

  27. Posted by fdfd | December 14, 2012 at 5:40 PM

    I've got an idea…

    -j gundlach

  28. Posted by Nesta | December 14, 2012 at 5:47 PM

    Steveface kill me a thousand deaths worse than you. Go find him your fucking self!

  29. Posted by guessed | December 14, 2012 at 6:15 PM

    Giving money to him/his family is very different from paying his legal bills (which is inadmissable due to attorney client privilege). That sounds like a nice juicy case of witness tampering [not a lawyer]. Can the Dealbreaker legal department get on the call please?

  30. Posted by Sookah Mahballs | December 15, 2012 at 3:45 PM

    dealbreaker and this comment are garbage. you schmucks need to focus on not trying to be the police men of the world.

  31. Posted by David Slaine | December 16, 2012 at 10:46 AM

    that's cause he isn't a jew.

  32. Posted by guest | December 18, 2012 at 1:52 PM

    And here I thought he was Italian.

  33. Posted by sohbet odalari | December 25, 2012 at 4:41 PM

    very blog

  34. Posted by Frankie Pentangeli | January 3, 2013 at 2:14 PM

    Look the FBI guys promised me a deal. So I made up a lot of stuff about Big Stevie 'cause that's what they wanted — but it was all lies — uh — everything. And I kept saying — Stevie did this and Stevie did that — .uh — so I said yea sure, why not.