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United States v. Martoma

United States District Court, S.D. New York

January 6, 2014

UNITED STATES OF AMERICA,
v.
MATHEW MARTOMA, Defendant

Decided January 5, 2014

For Mathew Martoma, also known as Sealed Defendant, Defendant: Daniel Prugh Roeser, Larkin M Morton, Richard Mark Strassberg, Goodwin Procter, LLP(NYC), New York, NY; Derek A. Cohen, Dorsey & Whitney LLP, New York, NY; Roberto M. Braceras, PRO HAC VICE, John Owen Farley, Goodwin Procter, LLP (Boston), Boston, MA.

For M.D. Sidney Gilman, Interested Party: Jonathan Nassau Halpern, Marc Lee Mukasey, Bracewell & Giuliani, LLP, New York, NY; Shannon B. Wolf, Bracewell & Giuliani LLP(Hartford), Hartford, CT.

For David E. Kaplan, Roxy D. Sullivan, Lindsey Rankin, Michael S. Allen, Chi-Pin Hsu, Interested Partys: Ethan David Wohl, Wohl & Fruchter LLP, New York, NY.

For University of Michigan, Interested Party: Anthony Scott Barkow, Jenner & Block LLP (NYC ), New York, NY.

For USA, Plaintiff: Eugene Edward Ingoglia, LEAD ATTORNEY, United States Attorney Office, SDNY, New York, NY; Arlo Devlin-Brown, U.S. Attorney's Office, SDNY (Chambers Street), New York, NY.

OPINION

ORDER

Paul G. Gardephe, United States District Judge.

In this insider trading case, Defendant Mathew Martoma is charged with conspiracy to commit securities fraud in violation of 18 U.S.C. § 371, and with two counts of securities fraud in violation of 15 U.S.C. § § 78j(b) and 78ff, 17 C.F.R. § § 240.10b-5 and 240.10b5-2, and 18 U.S.C. § 2. (Superseding Indictment (Dkt No. 61)) The Government alleges, inter alia, that between 2006 and July 2008, Martoma traded on the basis of material, non-public information, and caused his hedge fund employer -- SAC Capital -- to trade on the basis of material non-public information. The material non-public information was allegedly supplied by two doctors -- Dr. Sidney Gilman and Dr. Joel Ross -- who were participants in a clinical trial of a drug for possible use in treating Alzheimer's disease. Both doctors have entered into cooperation agreements with the Government and are expected testify at trial.

Page 459

This Order resolves the last outstanding issue with respect to the Defendant's motion to compel the production of any Brady and Giglio material that might be contained in communications between the United States Attorney's Office (" USAO" ) or the Securities and Exchange Commission (" SEC" ) and counsel for Dr. Gilman or counsel for Dr. Ross (Dkt. No. 149) -- namely, whether the USAO's Brady and Giglio obligations extend to communications between the SEC and Dr. Gilman's counsel, or the SEC and Dr. Ross's counsel, that are in the sole possession of the SEC.

BACKGROUND[1]

On December 26, 2013, the Defendant -- alleging that the USAO's " Brady and Giglio disclosures remain incomplete" -- moved to compel the USAO to produce any such material that might be contained in communications between the USAO or the SEC and counsel for Dr. Gilman or counsel for Dr. Ross. (Dkt. No. 149; Def. Br. (Dkt. No. 150) at 3) The Defendant contended that he is entitled to " statements reflecting discussions [between the USAO or the SEC and] counsel for Drs. Gilman or Ross (i) concerning their clients' and/or Mr. Martoma's innocence, (ii) that are inconsistent with [the doctors'] current statements, or (iii) concerning potential criminal charges." (Def. Br. (Dkt. No. 150) at 2)

In opposing this motion, the USAO argued, inter alia, that it does not have " an obligation to produce [any communications] in the SEC's custody that are not in the possession of the ...


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