NEW YORK (Reuters) – A divided federal appeals court on Monday upheld the insider trading conviction of Mathew Martoma, a former portfolio manager for billionaire Steven A. Cohen, finding enough evidence to establish guilt despite defective jury instructions.
In an unusual 2-1 decision, the 2nd U.S. Circuit Court of Appeals, which had upheld Martoma’s conviction and nine-year prison term in August 2017, withdrew its finding at that time that the jury instructions were “not obviously erroneous.”
It said the instructions wrongly allowed a conviction solely on evidence that a Michigan doctor had tipped Martoma about a Alzheimer’s drug trial to maintain a friendship, rather than to offer a benefit or further a “quid pro quo” relationship.
Chief Judge Robert Katzmann, writing for the majority, nevertheless wrote that “on the compelling facts of this case, it is clear beyond a reasonable doubt that a properly instructed jury would have found Martoma guilty.”
Martoma, 44, had worked at the CR Intrinsic Investors unit of Cohen’s SAC Capital Advisors LP.
The decision means he will remain in prison, following his February 2014 conviction for making $275 million of illegal gains in Elan Corp and Wyeth.
Circuit Judge Denny Chin again joined the majority, while Circuit Judge Rosemary Pooler again dissented.
Lawyers for Martoma did not immediately respond to requests for comment. They had been asking the entire appeals court to revisit the August 2017 decision.
Now called Point72 Asset Management LP, SAC pleaded guilty to fraud and paid $1.8 billion in U.S. criminal and civil settlements. Cohen was not criminally charged.
The case is U.S. v. Martoma, 2nd U.S. Circuit Court of Appeals, No. 14-3599.