Former University of Michigan Medical School professor testifies in insider-trading case
A former University of Michigan Medical School professor told a New York jury that he was “ashamed” of his role in an insider-trading case.
Sidney Gilman was an Alzheimer’s researcher at the university with major credentials; the 81-year-old neurologist worked at Harvard, Columbia and then Michigan, where he chaired the neurology department.
Now, the retired professor is a key witness against portfolio manager Mathew Martoma from SAC Capital, a Connecticut-based company.
During his testimony on Tuesday, Gilman said he gave Martoma secrets about a trial for an Alzheimer’s treatment from 2006 to 2008.
As Michigan Radio's Kate Wells reported in 2012, that information was pretty valuable to Martoma and SAC Capital – to the tune of $276 million:
Gilman told Martoma that the drug in testing, called "bapi" (short for bapineuzumab) was failing to prevent mental decline in Alzheimer's patients.
The news would be a major hit for the industry and investors, but by knowing about the negative test results before anyone else, Martoma's company could yank its $700 million investment out of two drug companies before the stocks crashed.
So instead of bleeding money, Martoma's company made $276 million in illicit gains, according to the SEC.
“I was intensely ashamed of it,” Gilman said of his activities. “I was hoping the whole thing would go away.”
But, as the New York Times reported, his role in the insider-trading case did not go away.
After initially lying to the Securities and Exchange Commission, Gilman eventually confessed to the FBI, telling federal agents about the illegal scoop he gave to SAC Capital employees. He has since paid back the $186,000 he earned in the deal.
"I had betrayed my colleagues, myself and my university,” Gilman said in trial.
For more background on the story, check out Kate's piece: Money, ego, and meds: Why would UM doc sell out to hedge fund?
- Melanie Kruvelis, Michigan Radio Newsroom