Former Law Student Martoma Convicted of Insider Trading in SAC Case

Former Harvard Law student and SAC Capital Advisors portfolio manager Mathew Martoma was found guilty of two counts of securities fraud and one count of conspiracy to commit securities fraud Thursday afternoon. The 39-year-old Martoma faces a maximum sentence of 45 years.

In a scheme that netted SAC Capital $275 million and scored a $9.3 million bonus for Martoma, he and colleagues made trades based on insider information about the testing of a drug to potentially cure Alzheimer’s, according the federal complaint against Martoma.

During the court proceedings, it was also discovered that Martoma was expelled from Harvard Law School in 1999 for creating a false transcript and using it to apply for clerkships with federal judges.

Administrators and faculty at the Law School repeatedly declined to comment on the case.

Martoma came to Harvard Law School after graduating from Duke University. Following his expulsion from Harvard Law School, Martoma applied to and was accepted to Stanford Business School, where he earned an MBA in 2003.

The court documents also revealed that Martoma, who changed his name from Ajai Mathew Thomas to Mathew Martoma after his expulsion, tried to deceive the Law School Administrative Board during his hearing there. Martoma altered emails and submitted a counterfeit report from a computer forensics firm that he created to hide his activities from the Ad Board.

Expulsions of such a nature are incredibly rare at Harvard Law School, according to Law School professor Alan M. Dershowitz. Dershowitz said that the Martoma case was a once-in-a-decade event in an interview with Bloomberg News last month.

The Law School refused to disclose how many Ad Board cases, which are kept confidential, occur each year.

Martoma’s Ad Board hearing and subsequent expulsion were only revealed after a judge unsealed court records detailing the case before Martoma’s federal trial.

More recently, in November, SAC Capital announced that it would pay a $1.8 billion penalty for the insider trading scheme. SAC Capital was founded and is run by hedge fund titan Steven A. Cohen, who has also been sued in civil court by the Securities and Exchange Commission.

Martoma was the eighth SAC Capital employee to plead guilty or be convicted of insider trading. Martoma’s lawyer told news outlets that his client planned to appeal.

Staff writer Tyler S. Olkowski can be reached at