Hedge fund founder's testimony excluded at trial

 By Larry Neumeister

Associated Press
 
NEW YORK (AP) — Billionaire Steven A. Cohen’s testimony to a financial regulatory agency cannot be shown to jurors at the insider trading trial of one of the former money managers at the hedge fund he founded, a judge said in a ruling made public Wednesday.
 
U.S. District Judge Paul Gardephe’s decision regarding the founder of Stamford, Conn.-based SAC Capital Advisors came as a jury was being selected at the trial of Mathew Martoma in Manhattan. Jury selection was to resume Thursday with opening statements likely to follow.

Martoma is accused of persuading a medical professor to leak secret data from an Alzheimer’s disease trial. The Boca Raton, Fla., resident has pleaded not guilty.

Martoma’s lawyers wanted to use Cohen’s May 3, 2012, testimony to show Cohen didn’t use Martoma’s information to make pivotal trades. Prosecutors say Martoma’s tips helped other traders at SAC earn a quarter-billion dollars illegally.

The judge said a Securities and Exchange Commission inquiry that included the questioning of Cohen was “exploratory and investigatory in nature” and irrelevant for the criminal trial.

He noted that Cohen’s deposition was taken before the development of much of the evidence against Martoma.

Cohen has not been criminally charged, but the SEC has accused him in a civil action of failing to prevent insider trading at the company.