Federal prosecutors today charged a hedge fund manager with using inside information about a new Alzheimer’s drug known amusing enough as “Bapineuzumab” to save $276 million in losses.
Mathew Martoma, who was arrested in Boca Raton, Fla., is accused of using info given to him by a doctor who was advising the drug’s maker, Elan Corp., during clinical trials. Prosecutors say Martoma “cultivated and corrupted” the doctor, and called the info, “the most lucrative inside tip of all time.”
Prosecutors say Martoma “exploited” a personal and financial relationship with the doctor. Martoma got the hedge funds to buy $700 million in Elan stock, and then abruptly dumped the shares when he learned that the clinical trials were showing poor results. He took a $9 million bonus and walked away.
The doctor, who agreed to cooperate with the feds, and Martoma developed a code when talking about the progress of the drug. They called it the multiple sclerosis drug, for example. When the trials showed poor results, the doctor told Martoma, and gave him a confidential power point presentation laying out the results.