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SAC's Martoma switches lawyers in insider-trading case

Former SAC Capital employee Mathew Martoma exits the Manhattan Federal court following an appearance on insider trading charges in New York
Former SAC Capital employee Mathew Martoma exits the Manhattan Federal court following an appearance on insider trading charges in New York

By Nate Raymond

NEW YORK (Reuters) - Mathew Martoma, a former portfolio manager at hedge fund SAC Capital Management, has hired a new lawyer to defend him in his insider-trading case.

Martoma has brought in Richard Strassberg at Goodwin Procter to take over his defense, a spokesman for the law firm confirmed on Thursday. The former fund manager previously was represented by Charles Stillman, a prominent New York white-collar lawyer with Stillman & Friedman.

In an affidavit filed on Thursday in District Court in Manhattan, Strassberg said Martoma sought to replace his lawyers because of Goodwin Procter's "expertise in the subject matter of this case."

Martoma is one of several current or former SAC Capital employees charged with insider trading while working at the $15 billion hedge fund run by billionaire Steven A. Cohen. Cohen has not been charged with any wrongdoing

Michael Steinberg, a veteran SAC portfolio manager, was charged last week with insider trading in two technology stocks. He has pleaded not guilty.

Martoma has been charged with conspiracy and securities fraud related to trades in Elan Corporation Plc and Wyeth, which now is part of Pfizer Inc.

Authorities said the trades were made based on illegal tips from a doctor and allowed CR Intrinsic Investors, an SAC fund, to earn profits and dodge losses of $276 million in 2008.

Martoma has also been charged in a related civil action by the U.S. Securities and Exchange Commission.

Strassberg is a former chief of the major crimes unit at the Manhattan U.S. Attorney's Office.

He previously represented former Deutsche Bank trader Jon-Paul Rorech in a civil insider trading case by the SEC involving credit default swaps. A federal judge dismissed the case in 2010 following a bench trial.

More recently, Strassberg represented Swiss bank Wegelin & Co, which pleaded guilty earlier this year to helping wealthy U.S. citizens evade taxes.

District Judge Paul Gardephe approved Martoma's lawyer switch on Thursday, court records show. The judge is expected to set a trial date at a June 5 hearing.

SAC has agreed to pay $616 million to settle two civil SEC actions over insider-trading allegations. One of the settlements, for $602 million, is with CR Intrinsic and stems from the Martoma case.

While a smaller $14 million settlement with another SAC fund has received judicial approval, U.S. District Judge Victor Marrero in Manhattan on March 28 questioned the CR Intrinsic deal and did not immediately approve it.

The case is USA v. Martoma, U.S. District Court, Southern District of New York, No. 12-00973.

(Reporting by Nate Raymond in New York. Editing by Andre Grenon)

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