“We have been remarkably successful in convincing persons to cooperate with the government, and provide evidence to us, and in a court of law,” said Robert Khuzami, “You cannot trust your partners in crime to keep your secrets.”

Photograph by Scott Eells/Bloomberg

Mathew Martoma exits federal court in New York on Nov. 26, 2012

Why Hasn’t Ex-SAC Capital Manager Mathew Martoma Turned on Steve Cohen?

By Sheelah Kolhatkar

When Mathew Martoma was confronted by an FBI agent on the front lawn of his Boca Raton (Fla.) mansion last year with allegations of insider trading, he was so distressed that he fainted. But apparently it wasn’t enough to compel the former SAC Capital portfolio manager to cooperate with federal investigators. That was only the first of several opportunities Martoma has been given to “flip” and turn on his former boss, SAC founder Steven Cohen, according to a person familiar with the investigation. So far, Martoma has declined to cooperate at every opportunity, and time is running out for him to do so. Martoma was charged on Nov. 20 with making $276 million in illegal profits and avoided losses trading stocks of the pharmaceutical companies Elan (ELN) and Wyeth (PFE) while working at SAC. Martoma says he is innocent. No charges have been filed against Cohen.

“We have been remarkably successful in convincing persons to cooperate with the government, and provide evidence to us, and in a court of law,” said Robert Khuzami, the director of the enforcement division at the Securities and Exchange Commission, during a press conference to announce the charges against Martoma. “You cannot trust your partners in crime to keep your secrets.”

 

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