The secrecy was so tight that Chandler Bocklage, a top trading assistant to hedge fund chief Steven Cohen, testified he didn't learn about the sale until afterward. He said he could not recall any equivalent experience during his 12 years at the hedge fund.
Bocklage's testimony focused on transactions in which SAC Capital dumped a roughly $700 million stake in shares of Elan and Wyeth, companies that were developing an experimental drug intended to treat Alzheimer's disease. SAC Capital sold the shares shortly before the pharma firms reported disappointing results in a clinical trial of the drug, an announcement that sent the stock prices sharply lower.
Martoma is on trial in Manhattan federal court based on allegations he triggered the sale based on illegal inside information he received from two doctors who gave him details of the drug trial results before the data was publicly disclosed. Both doctors testified for the government as prosecution witnesses.
Bocklage testified he initially thought SAC Capital must have "lost a lot of money" when the Elan and Wyeth stock nosedived. He later learned the hedge fund had unloaded the shares before the drop, but testified he was never told why.
Federal prosecutors allege that the hedge fund reaped approximately $276 million in gains and avoided losses by selling the shares before the disappointing announcement. SAC Capital increased its gain on the transactions by placing bearish investment bets that shares of the two pharma firms would drop, prosecutors charge.
Wednesday's testimony by Bocklage and a second SAC Capital trader appeared to show that some financial information was carefully compartmentalized at the hedge fund. It also provided a glimpse at operations inside the Greenwich, Con! n.-based company.
Bocklage testified that he manned a trading post to Cohen's right and helped him keep up to date on market developments. Jeffrey Miller, an SAC Capital execution trader, testified that he took trading instructions from Cohen via an electronic headset, confirmed the orders and then executed the trades.
"I personally think Steve is the greatest trader of all time," said Bocklage, referring to Cohen's successful investment record and SAC Capital's growth into one of the financial industry's largest hedge funds.
However, the fund is now terminating its investments for outsiders after pleading guilty in November and agreeing to pay a record $1.8 billion to settle insider trading allegations. Cohen has not been charged. But Manhattan U.S. Attorney Preet Bharara has said his investigation is continuing.
No comments:
Post a Comment