Martoma’s Trades
Five SAC employees also received subpoenas in May to appear before a grand jury. Conheeney; Chief Operating Officer Solomon Kumin; Steve Kessler, head of compliance; Phillipp Villhauer, head trader; and portfolio manager Anthony Vaccarino were recently interviewed by prosecutors at their offices in lower Manhattan, said the people.
Last year, the Securities and Exchange Commission deposed Cohen about trades made close to news that generated profits for his firm, people familiar with the matter said at the time.
The five-year statute of limitations covering Martoma’s 2008 trades, in which the hedge fund netted $276 million in profits and averted losses from alleged inside information concerning a drug trial, expires in late July.
Gasthalter declined to comment on whether Cohen had invoked his Fifth Amendment right, as did Jerika Richardson, a spokeswoman for U.S. Attorney Preet Bharara in Manhattan. Cohen hasn’t been accused of any wrongdoing and has said he acted appropriately. Martoma has pleaded not guilty and is scheduled for trial on Nov. 4.
SAC Compliance
If a “target” of a government investigation refuses to testify on Fifth Amendment grounds, they don’t normally need to appear before a grand jury, according to government manual. A “target” is a person as to whom the prosecutor or the grand jury has substantial evidence linking him or her to a crime and who is considered to be is a putative defendant, the manual says.
All the executives called before the grand jury are long- time SAC employees who would be in a position to know about compliance policies at the firm. Conheeney has worked at SAC since in 1999 and was made president in 2008, according to fund documents. Kessler and Kumin both joined in 2005, while Villhauer, who has worked at SAC since 2002, executed the trades at the center of Martoma’s case. Vaccarino is a portfolio manager who specializes in consumer companies.
The U.S. has linked at least nine current or former employees to allegations of insider trading while at the hedge fund.