Prominent Doctor Said to Be Tied to Insider Trading Case at SAC

A prominent New Jersey doctor specializing in Alzheimer’s disease has become ensnared in the government’s criminal case against a former portfolio manager at SAC Capital Advisors, the hedge fund owned by the billionaire investor Steven A. Cohen.

The doctor, Joel Ross, is one of two physicians who prosecutors say leaked secret information about clinical drug trials to Mathew Martoma, the onetime SAC portfolio manager, according to a person with direct knowledge of the case. The charges against Mr. Martoma are at the center of the government’s insider-trading prosecution of SAC.

Last month, federal prosecutors filed an updated indictment against Mr. Martoma, adding a claim that he had received confidential data from an unnamed second doctor about a drug being developed by the pharmaceutical companies Elan and Wyeth.

The first doctor, Sidney Gilman, a neurologist at the University of Michigan, had already been named by the government when it first brought the charges in November. Prosecutors have agreed to not prosecute him in exchange for his testimony against Mr. Martoma.

Prosecutors say the tips that Mr. Martoma received about the clinical tests allowed SAC to earn profits and avoid losses totaling $276 million.

Dr. Ross, whose name was earlier reported by The Wall Street Journal, did not immediately return a call seeking comment. He has not been charged with any wrongdoing. The government’s court filing calls him a “co-conspirator.”

A lawyer for Mr. Martoma and an SAC spokesman declined to comment. Mr. Cohen has not been charged with any criminal wrongdoing, and has told his employees and investors that he has at all times acted appropriately.

In July, Preet Bharara, the United States attorney in Manhattan, brought criminal charges against the hedge fund, calling SAC “a magnet for market cheaters.” That followed a civil action brought by the Securities and Exchange Commission against Mr. Cohen, accusing him of failing to reasonably supervise his employees, including Mr. Martoma.

Ten former SAC employees have either been charged with or implicated in illegal trading while at the fund; of those, five have admitted guilt. Federal investigators have unsuccessfully tried to persuade Mr. Martoma to plead guilty and cooperate in helping them build a criminal case against Mr. Cohen.

Virtually all of SAC’s outside investors have cut ties with the fund in the last year. They accounted for about $6 billion of the $15 billion that the SAC had under management at the beginning of the year. The balance of about $9 billion belongs mostly to Mr. Cohen; a sliver of the rest belongs to SAC employees.

Mr. Martoma’s case highlights how SAC employees aggressively deployed so-called expert networks to gain an investment edge. These networks connect money managers with industry specialists.

The government said that Mr. Martoma e-mailed an expert networking firm — Gerson Lehrman Group, according to people briefed on the case — a list of 20 doctors serving as researchers in the clinical trials for the Alzheimer’s drug and requested meetings with them. A Gerson Lehrman employee replied to Mr. Martoma with bad news — nine doctors had responded, and all declined to speak with him, citing a “conflict of interest.”

But prosecutors say Mr. Martoma was able to corrupt Dr. Gilman, and receive important information about the Elan and Wyeth drug trials.

Mr. Martoma also connected with a second doctor, Dr. Ross, through an unnamed firm with an expert-network business.

The government has tied Mr. Cohen to Mr. Martoma’s trading. In its civil action, the S.E.C. said that Mr. Cohen knew of a second doctor besides Dr. Gilman who might have had secret information about the clinical trials. And Mr. Cohen encouraged Mr. Martoma to talk further with the doctor, the government said.

Dr. Ross runs the Memory Enhancement Center in Eatontown, N.J. According to his biography on the center’s Web site, Dr. Ross has served as an investigator for nearly every medication tested to treat the symptoms of Alzheimer’s disease since 1994.

A 2012 profile in The Star-Ledger of Newark said that Dr. Ross sought out patients beginning to suffer memory loss and encouraged them to take part in trials for experimental Alzheimer’s drugs. “Without being in a study, you have zero hope of slowing the disease down,” he said.