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Doctor quizzed about drug info discussions with investors outside of SAC

Former SAC Capital portfolio manager Mathew Martoma arrives at the Manhattan Federal Courthouse in downtown Manhattan in New York, January 1
Former SAC Capital portfolio manager Mathew Martoma arrives at the Manhattan Federal Courthouse in downtown Manhattan in New York, January 1

By Nate Raymond

NEW YORK (Reuters) - A doctor who says he leaked details of a clinical drug trial to SAC Capital Advisors portfolio manager Mathew Martoma also discussed the drug under development with other investors, according to documents displayed in court on Thursday.

But Sidney Gilman, who is testifying as a government witness in Martoma's insider trading trial, said that unlike his interactions with Martoma, he did not recall many of his meetings with the other investors.

"Recalling the contents of each one is a difficult task," Gilman said in New York federal court.

Gilman's testimony came under questioning by defense lawyers, who are seeking to raise questions about the doctor's credibility as the government's star witness against Martoma.

A former portfolio manager in SAC's CR Intrinsic Investors division, Martoma, 39, is one of eight current or former employees of SAC Capital Advisors to face criminal charges for insider trading.

The hedge fund, headed by Steven A. Cohen, has agreed to pay $1.8 billion in criminal and civil settlements and plead guilty to fraud charges stemming from insider trading by its employees.

Earlier in the trial, Gilman, who chaired the safety monitoring committee on the drug trial, told the jury that he gave Martoma confidential information about the Phase II drug trial for a potential Alzheimer's treatment called bapineuzumab.

On Thursday, defense lawyers showed the jury documents indicating that Gilman also spoke about the drug with people at other investment firms, including Citadel Investment Group, Maverick Capital, Highside Capital Management.

Gilman said he did not recall many of the discussions, although he said he may have discussed parts of the drug trial that were not subject to confidentiality clauses and that he "may have slipped" and discussed non-public information unintentionally at times.

None of the investors mentioned during Thursday's questioning have been accused of wrongdoing. Representatives of Citadel, Maverick and Highside did not immediately respond to requests for comment.

The proceedings provided an opportunity for the defense to raise questions with jury about how Gilman, 81, could have detailed memories of his meetings with Martoma and not with others who were also interested in the Alzheimer's drug under development by Elan Corp Plc and Wyeth.

The testimony came a day after Gilman said he had recalled only two weeks ago details of a key meeting with Martoma and that there "still remains some holes in my memory."

Prosecutors contend that Martoma relied on the information in pushing SAC to build up a $700 million position in Elan and Wyeth, now a unit of Pfizer Inc, before ultimately selling it after he received a tip from Gilman about negative trial results.

The trading enabled SAC Capital to make profits and avoid losses of $276 million, prosecutors have said.

Martoma's discussions with Gilman were arranged through Gerson Lehrman Group, a firm that pairs experts with hedge fund traders.

During the time period in question Gilman was also involved in hundreds of other paid consultations with investors, according to Gerson Lehrman records, which defense lawyers introduced as exhibits.

Some of the individuals asked to speak specifically about the drug Elan and Wyeth were developing, the records show.

Gilman said he could not remember many of the paid consultations or what they discussed.

He also differentiated between his discussions with the others and those with Martoma, who he said wanted to talk after the safety monitoring committee met.

"He wanted me to regurgitate the meeting data," he said.

The case is U.S. v. Martoma, U.S. District Court, Southern District of New York, 12-cr-00973.

(Reporting by Nate Raymond)

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