• 07 Feb 2014 at 5:02 PM

What Does Mathew Martoma’s Conviction Really Mean?

So, the insider trader formerly known as Ajai Mathew Thomas has been convicted of said insider trading, just like everyone else who’s been charged with it in the last five years. But forget this nobody grain of sand. How does it impact his former boss and conversation partner?

Answer: Probably not at all.

From a public relations standpoint, his conviction signifies another blow for Cohen, who had already been forced to drop all of his clients in converting SAC Capital into an investment vehicle for his $9 billion fortune.

Unless prosecutors leverage yesterday’s verdict to convince Martoma to turn against his former boss, however, his conviction is likely to have little bearing in their on-going pursuit of Cohen.

On the other hand, maybe?

There’s nothing like the prospect of prison time to make one reconsider one’s choices.

In the wake of the guilty verdict Thursday in the insider trading case against former hedge fund manager Mathew Martoma, prosecutors will certainly make another attempt to “flip” him–he is the most likely source of evidence, if any exists, of wrongdoing by Steven Cohen, the founder of the beleaguered SAC Capital Advisors. But for Martoma, who has never claimed to have any evidence against Cohen, it may be too late to make a deal to stay out of jail….

Still, at 39-years-old, Martoma may be eager to do what he can to pare down the potential 45-year maximum sentence that comes with his conviction on the three counts.

Either way, it gave us a newly-expanded infographic with Steve Cohen’s face in the middle.

What it means for Mr. Martoma is a good deal clearer: Up to a decade in prison, the need for a really good appellate lawyer and the end of a American Dream realized.

Mathew Martoma had been on his way to being another American success story. Today, he is the eighth person who once worked for the hedge fund titan Steven A. Cohen to be convicted of insider trading….

The son of immigrant parents from India, Mr. Martoma, 39, graduated from Duke, attended Harvard Law School and earned an M.B.A. from Stanford Business School before he landed a job as portfolio manager at SAC, one of the most successful hedge funds in the world….

Until his arrest in November 2012, Mr. Martoma had seemingly checked off all the boxes on the path to success. At SAC, he earned a $9.3 million bonus in 2008, which enabled him and his wife to buy a $1.9 million home in Boca Raton, Fla., for themselves and their three young children.

But much of Mr. Martoma’s adult life was checkered with cheating.

About that….

Former Harvard Law student and SAC Capital Advisors portfolio manager Mathew Martoma was found guilty of two counts of securities fraud and one count of conspiracy to commit securities fraud Thursday afternoon. The 39-year-old Martoma faces a maximum sentence of 45 years….

During the court proceedings, it was also discovered that Martoma was expelled from Harvard Law School in 1999 for creating a false transcript and using it to apply for clerkships with federal judges….

Expulsions of such a nature are incredibly rare at Harvard Law School, according to Law School professor Alan M. Dershowitz. Dershowitz said that the Martoma case was a once-in-a-decade event in an interview with Bloomberg News last month.

Martoma’s downfall made the pages of his alma mater’s student newspaper (even if they spelled his name wrong), as well as that of the university that counts Steve Cohen as a trustee. As for the graduate school that didn’t throw Martoma out? Well, it seems they’ve never heard of him.

And before we close the book on Martoma (for this week, anyway), let’s give it up for the immortal Preet Bharara on his 79-peat.

Former SAC Capital Advisor portfolio manager Mathew Martoma was found guilty of insider trading on Thursday — bringing US Attorney Preet Bharara’s record in his five-year-old Wall Street probe to 79-0….

“In the short run, cheating may have been profitable for Martoma, but in the end, it made him a convicted felon, and likely will result in the forfeiture of his illegal windfall and the loss of his liberty,” Bharara said in a statement after the verdict….

Bharara’s probe has shaken the hedge-fund world and its relationship with so-called expert networks, where much of the inside tips originated. Six hedge funds — including SAC Capital — were shuttered by the probe.

Martoma is one of 11 inside traders ensnared in Bharara’s dragnet who’ve gone to trial — and the second from SAC.

Of the 78 prior convictions, seven were present or former SAC employees. Six pled guilty, as did the firm.

Martoma Prosecutors Bask in Victory Over a Grain of Sand [Bloomberg/Matt]
What Does Martoma’s Conviction Mean For SAC Capital’s Steven Cohen? [Forbes]
New Guilty Verdict Could Be Bad News For SAC Capital’s Steven Cohen [Time]
The Cohen Connections [DealBook]
Now, the Sentencing for Martoma [DealBook, w/ bonus pic of Raj Rajaratnam]
Martoma faces loss of home, millions in forfeiture [USA Today via LoHud]
Dershowitz: Martoma Needs a Good Appellate Lawyer [Bloomberg TV]
Ex-SAC Trader Convicted of Securities Fraud [DealBook]
Former Law Student Martoma Convicted of Insider trading in SAC Case [Harvard Crimson]
Trustee’s former employee convicted [Brown Daily Herald]
New notch for Preet as Martoma is convicted of insider trading [NYPost]

4 comments (hidden to protect delicate sensibilities)
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Comments (4)

  1. Posted by Guest | February 7, 2014 at 5:30 PM

    Early opening bell, links to a Matt article and Shaz writing 10(ish) sentences?! I can't think of any better way to start my weekend.

    -Everyone

  2. Posted by guest | February 7, 2014 at 5:59 PM

    you should get some new material

  3. Posted by guest | February 7, 2014 at 6:00 PM

    – no one

    fixed it for you

  4. Posted by ForeBarca | February 12, 2014 at 12:36 PM

    I wish the New York Times would write an article on Preet Bharara and the flak he has received in the Indian, and Indian American community for exposing the buggery of Rajat Gupta, Rajaram, and Matthew Martoma. For example, India's Financial Express reported the Martoma incident with this headline: Preet Bharara strikes again. In addition, the more illogical elements in the Indian community are stating that Mr.Bharara is a stooge of the White man, and a slave of the Jewish cabal, both of which sound ridiculous. Even as wretched as they sounds, the fact is worth checking as to what constitutes a good Indian, what is a bad Indian, what is a good America, and whether the American Dream to be achieved at all costs.