A Malayali Christian (the same state and religion as the Devyani maid, Sangeetha Richard) is the SAC chief trader who got nabbed by Preet Bharara in his quest to nail one of the biggest racketeers on Wall Street, Stephen Cohen. I have no problems with that, except that Bharara is again missing the big picture.
SAC’s Cohen hasn’t even been charged and the real racketeering between Goldman and the Fed Reserve is nowhere addressed. Meanwhile, insider trading with expert networks was MARGINAL to the crisis of 2008, which was a crisis of cheap money compounded by off-shore and other book-cooking (manager looting of firms via account control fraud), in some of which the intelligence agencies (AIG’s Hank Greenberg who is tied to the CIA) were fully involved. Thus has the whole investigation into Wall Street been skewed.
“SAC hired Mr. Martoma to help Mr. Cohen gain that edge. The son of Indian immigrants, Mr. Martoma was born Ajai Mathew Mariamdani Thomas, but changed his name in 2003, according to legal records. Raised in Merritt Island, Fla., outside Cape Canaveral, Mr. Martoma graduated summa cum laude from Duke University in 1995, where he studied biomedicine, ethics and public policy. After college, Mr. Martoma worked in Washington at the National Human Genome Research Institute.
He spent a year and a half at Harvard Law School, then dropped out to earn a business degree at Stanford University. He blended his passion for medicine and a desire to work on Wall Street by pursuing a career as a stock analyst covering health care companies. After a stint at a smaller hedge fund, Sirios Capital Management in Boston, Mr. Martoma joined SAC.
He became part of a new unit, CR Intrinsic, which was set up as a research engine of SAC. CR Intrinsic (the CR stands for Cumulative Return) was led by Matthew Grossman, an ambitious young analyst who became Mr. Cohen’s right-hand man. Mr. Grossman had worked at Tiger Management, the hedge fund known for its rigorous research and longer-term investment horizon.
With a deep network of contacts in the pharmaceutical and biotech fields, Mr. Martoma made a mark at CR Intrinsic. The volatile health care stocks in which Mr. Martoma specialized had long been favorites of Mr. Cohen’s, offering the potential for big returns through betting on the outcome of events like clinical trials for promising drugs.
To bolster his knowledge, Mr. Martoma tapped into expert-network firms, which employ consultants who match money managers with industry specialists, including public company employees.
For an information-driven hedge fund like SAC, the temptation to exploit the expert-network relationship was immense, two former employees said.
Two of the former SAC employees who have admitted to insider trading said they used expert-network firms to obtain secret information about public companies. And of the roughly 70 insider trading cases that federal prosecutors in Manhattan have brought in the last three years, more than a dozen have involved expert networks.
Mr. Martoma’s case began in 2006, when the expert-network firm Gerson Lehrman Group connected him to Sidney Gilman, a neurology professor at the University of Michigan and a specialist in Alzheimer’s disease. Dr. Gilman, who moonlighted as a consultant for Gerson Lehrman, helped oversee clinical trials for bapineuzumab, or bapi, a new Alzheimer’s drug being jointly developed by Elan and Wyeth.
He also brazenly leaked to Mr. Martoma secret data about the trials throughout 2008, according to the government, violating his duty to the drug companies and breaching his agreement with Gerson Lehrman not to divulge confidential information to money managers. Dr. Gilman earned $108,000 from his work for SAC, the government said.”