From Associated Press:

A former SAC Capital Advisors portfolio manager was convicted Thursday of helping his company earn more than a quarter billion dollars illegally through trades based on secrets about the testing of a potential breakthrough Alzheimer’s drug.

A federal jury in Manhattan found Martoma, 39, guilty on all three of the conspiracy and securities fraud charges that he faced, in what prosecutors said was a scheme that netted SAC Capital $275 million.

The verdict capped a three-week trial that featured testimony from two prominent doctors who confessed spilling secrets to Martoma during lucrative consultations with financiers.

Martoma sat expressionless as the jury forewoman announced he had been found guilty of two counts of securities fraud and conspiracy to commit securities fraud. Tears streamed down the face of his wife, who sat with her hands folded on her yellow dress.

The trial also contained frequent mentions of SAC Capital’s billionaire founder, Steven A. Cohen. Defense lawyer Richard Strassberg said in his closing argument Monday that Cohen was the real target of investigators. He said his client was victimized by the testimony of doctors who traded their credibility for plea deals that left them beholden to the government.

He said the doctors learned “just how frighteningly scary it can be if you get in the way of a government investigation that’s targeting someone like Steve Cohen.”

CNBC’s Dominic Chu reports the insider trading trial of U.S. versus Martoma has reached a verdict.

Sidney Gilman, an 81-year-old former professor of neurology at the University of Michigan Medical School, testified that he gave Martoma the secret results of the drug trial sponsored by drug makers Elan and Wyeth nearly two weeks before they were publicly announced.

He said he was charmed by Martoma, 39, who seemed more knowledgeable about his work than hundreds of others in the financial community who paid Gilman more than $1 million over several years for consultations.

Gilman said he could not recall giving similar information to anyone else, though he conceded that he “perhaps unintentionally … may have slipped here and there.”

Assistant U.S. Attorney Arlo Devlin-Brown told the jury that after the doctor showed Martoma the test results in one of 43 consultations the pair had, Martoma sent Cohen an early morning email asking: “Is there a good time to catch up with you this morning? It’s important.” A half hour later, they spoke for 20 minutes on the phone.

The next day, Devlin-Brown said, Martoma and SAC Capital began selling all their shares in Elan and Wyeth and building a short position that would make millions of dollars when the stock of both companies plummeted following the public announcement of the drug trial’s results. The government said the trades on both ends earned $275 million in profits, enough to score a $9.3 million bonus for Martoma.

“Ladies and gentlemen, Mr. Martoma, though all of this circumstantial evidence, has been caught with his hand deep inside the cookie jar, and defense counsel wants you to think that maybe he was just putting the cookie back,” Devlin-Brown said in his closing. The prosecutor said Gilman, formerly one of the top Alzheimer’s researchers in the world, has all but ended his career. “He’s 81, and he’s humiliated.”

Strassberg told jurors Gilman’s “story at its heart makes no sense” because his memory was flawed when he met with Martoma in 2008 while he was undergoing chemotherapy for successful cancer treatments.

Another doctor, Joel Ross, testified that he also gave Martoma secrets about the Alzheimer drug test, in part because he hoped Martoma would connect him with biotechnology companies that might provide business for his new drug research center in Eatontown, N.J.

SAC Capital pleaded guilty in November to fraud charges and agreed to pay $1.8 billion to settle charges that it allowed, if not encouraged, insider trading for more than a decade.

Cohen has not been criminally charged, but the Securities and Exchange Commission has accused him in a civil action of failing to prevent insider trading at the company, which he founded in 1992 and bears his initials. Cohen has disputed the allegations.

Strassberg told jurors that Martoma, born to immigrants in Florida, was a “quintessential American success story” and that they could acquit him based on even one of “dozens and dozens” of inconsistencies in Gilman’s testimony.

“Mathew’s life is on the line,” he said, as he hinted that a conviction could bring a lengthy prison term because insider trading is “deadly, deadly serious.”

“I’m going to put his life in your hands,” he said.

Then, speaking like a basketball coach insisting that his team not lose at home, he told jurors to reject the government’s version of events and “stand up and to do justice. I ask you to tell them, `No, not in this courtroom, not while you are the jurors!’”

There was no mention at trial of Martoma’s educational record at Harvard Law School, where he was expelled in 1999 after he used a forged transcript he claimed he created to impress his parents to apply for a clerkship with as many as 23 federal appeals judges.

Read more from Associated Press…

From CNN Money:

U.S. government agents have arrested Charlie Shrem, the CEO of Bitcoin exchange BitInstant, charging him with laundering money for customers of online drug bazaar Silk Road.

The U.S. attorney in the Southern District of New York said Shrem helped someone he hadn’t met in person, Robert Faiella, sell more than $1 million worth of bitcoins to Silk Road customers. Faiella, a 52-year-old Florida man, allegedly ran an underground Bitcoin exchange using the alias BTCKing.

Shrem was arrested at John F. Kennedy International Airport in New York on Sunday, and Faiella was arrested at his home in Cape Coral, Fla., on Monday, prosecutors said. Both are charged with conspiracy to launder money and operating an unlicensed money transmitting business. Additionally, Shrem faces a charge for not tipping off the feds to what was allegedly going on.

Shrem, 24, is a major player in the Bitcoin world. The BitInstant exchange, based in New York City, lets people buy bitcoins locally at more than 700,000 locations in the United States, as well as Brazil, Russia and elsewhere. It received a $1.5 million investment last year from Cameron and Tyler Winklevoss. Shrem is also vice chairman of the Bitcoin Foundation, one of the currency’s biggest advocates

Read more from CNN Money

Tough economic times call for inventive solutions.

January 23, 2014

In today’s economic climate typical bank financing is only available for businesses that do not need it. With the government regulatory apparatus working towards derailing hedge funds that finance businesses in all forms even alternative financing solutions are no longer available to most businesses.

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Teri Buhl goes to Jail

September 10, 2013

Teri Buhl, who was found guilty on misdemeanor charges of harassment and breach of peace, was sentenced to 30 days in jail, one-year probation and a strict order not to interact with the victims’ family, in Norwalk Superior Court today.

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SEC Charges Steve Cohen For Failing To Stop Insider Trading At SAC Capital

July 22, 2013

The SEC has slapped hedge fund manager Steve Cohen with civil charges, accusing the billionaire of “failure to supervise” a pair of senior employees now facing criminal prosecution for insider trading.

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Cohen Opts Not to Testify In US Case Against SAC

July 22, 2013

Steven A. Cohen has declined to testify before a grand jury, raising the stakes in the government’s long-running insider trading investigation into his giant hedge fund, SAC Capital Advisors.

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SAC Probers Weighing ‘Willful Blindness’ Tack

July 22, 2013

U.S. officials are investigating whether hedge-fund titan Steven A. Cohen purposely avoided learning about alleged criminal activity at his firm and, if so, whether that behavior could form an element of any charges against him, according to people familiar with the matter.

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SAC Capital Redemptions $2 to $3 Billion: Exclusive

July 22, 2013

The hedge fund SAC Capital received between $2 billion and $3 billion in requests last week from investors for the return of capital, say people familiar with the matter, with the total being closer to $3 billion amid an intensifying Justice Department investigation.

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An Earlier Hedge Fund Inquiry May Have Led to the SAC Capital Case

July 22, 2013

Some trades by Raj Rajaratnam’s younger brother in a technology stock nearly seven years ago may have inadvertently put SAC Capital Advisors, the hedge fund behemoth founded by Steven A. Cohen, on regulators’ radar, government documents show.

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Investors flee SAC Capital

July 22, 2013

Both SAC and its founder Steven A. Cohen have been at the epicenter of a federal investigation into insider trading for several years, but the Justice Department’s case against the firm and Cohen appears to be ramping up lately.

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