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VideoMathew Martoma, the former SAC Capital Advisors trader convicted of insider trading in February, does not think he should get more jail time than the 11 years in prison that Raj Rajaratnam, the co-founder of the Galleon hedge fund, is serving for insider trading.
In a lengthy court submission, Mr. Martoma’s lawyers are asking Judge Paul G. Gardephe of the United States District Court in Manhattan to show leniency when imposing a sentence next month on Mr. Martoma. He is the former portfolio manager for SAC, the firm founded and owned by the billionaire investor Steven A. Cohen. The submission, filed late Tuesday, also included about 100 letters of support for Mr. Martoma, including one from his wife, Rosemary. The couple has three young children.
Mr. Martoma, 40, and his lawyer Richard Strassberg did not recommend a specific sentence in the court filing, but said it should be considerably less than the minimum sentence of nearly 15 years and seven months recommended by the probation department for district court. The probation department recommended a maximum sentence of almost 20 years.
In the court filing, Mr. Strassberg called the recommendation by the probation department “outrageous.”
He noted that the minimum sentence recommendation was nearly 50 percent greater than the one given to Mr. Rajaratnam — who so far has been given the stiffest sentence in the federal government’s multiyear crackdown on insider trading in the hedge fund industry. Mr. Rajaratnam, the Galleon co-founder, whose illegal trading was captured on government wiretaps, was convicted in May 2011.
Mr. Strassberg also pointed out that Mr. Rajaratnam was convicted of insider trading in more than a dozen stocks and of getting inside information from a network of associates, whereas Mr. Martoma was convicted of a single episode of improper trading. Mr. Strassberg said the conduct of his client “does not even begin to approach the charged conduct of Mr. Rajaratnam.”
In the court filing, Mr. Strassberg quoted from letters written by Mr. Martoma’s family members worrying about the impact and hardship a long sentence would have on his children and his wife, a pediatrician, who has not worked steadily since the couple moved to Boca Raton, Fla. In one letter, Ms. Martoma’s uncle, Skaria Achettu, describes his niece as a “frail girl” who has shown “unusual reliance, for whatever reason, on Mathew for everything.”
Mr. Martoma, convicted in February of helping SAC generate profits and avoid losses totaling $275 million, is scheduled to be sentenced on June 10. That date may change because the probation department was late in submitting its recommendation to prosecutors and the defense team. Prosecutors working for Preet Bharara, the United States attorney for Manhattan, have about two weeks to submit their recommendation to Judge Gardephe.
A jury convicted Mr. Martoma of charges that he helped SAC avoid big losses in shares of the drug companies Elan and Wyeth after he got tipped about potential trouble with a clinical trial for an experimental drug the two companies were developing in 2008. The evidence during the trial revealed that Mr. Cohen, after getting a Sunday phone call from Mr. Martoma, gave instructions on how SAC should quickly sell off its positions in those stocks. Mr. Cohen was not charged with any wrongdoing.
Mr. Cohen’s firm, which has been a focal point of the investigation for years, pleaded guilty to insider trading and paid a $1.2 billion fine to the federal government. The billionaire investor, who faces a civil administrative action over his failure to properly supervise Mr. Martoma and others at his firm, in March renamed his firm Point72 Asset Management and is now running it as a family office that manages $9 billion to $10 billion of his own money.
The administrative proceeding filed by the Securities and Exchange Commission against Mr. Cohen has been delayed at the prosecution’s request. In a letter Wednesday to the administrative judge overseeing the S.E.C.’s action against Mr. Cohen, federal prosecutors sought an extension of an earlier stay pending the outcome a closely watched appeal of the convictions of two former hedge fund managers. An appellate ruling in favor of the two could lead to new trials not only for them but potentially others convicted of insider trading, including another former SAC trader, Michael Steinberg, who was sentenced to three and a half years in prison on May 16.
Mr. Strassberg, in the filing, also urged Judge Gardephe not to give any weight to the revelation on the eve of the trial that Mr. Martoma had been expelled from Harvard Law School for changing the grades on his transcript and then trying to cover up his misdeeds. He said the publicity surrounding the expulsion had been punishment enough.
“Mr. Martoma has made mistakes but, as the many letters of friends, family, colleagues, and acquaintances show, he is a good person,” Mr. Strassberg said.