Matthew Martoma, the former portfolio manager at SAC Capital Advisors LP, was sentenced to 9 years in prison for insider trading on September 8, 2014. This is one of the longest sentences given out to “white-collar crimes”, and the severity of this lengthy sentence has created some heated debates.
Looking at the newspaper headings, I casually guessed that Martoma was severely sentenced for the gigantic profits he made through insider trading. Martoma’s actions is said to have created $275 million in profit and avoided losses for SAC, and a bonus of $9 million for himself. Authorities have called the case to be “the most lucrative insider trading scheme in U.S. history.” However, after further research and readings, I realized that there were others who committed more serious white-collar crimes but were sentenced to a term only slightly longer than Martoma’s. Why is Martoma’s sentence so long?
Arguably the most significant cause of the severe punishment is his unwillingness to cooperate with his prosecutors. The FBI has been attempting to build a case against Martoma’s former boss Steven A. Cohen for years. Martoma’s case was an opportunity for the FBI to further their investigation into Cohen, which would likely have led to the billionaire’s arrest. Martoma’s lack of cooperation with prosecutors added to his sentence under federal guidelines.
In short, the punishment for Martoma included not only the insider trading, but also for lack of willingness to respond to his prosecutors’ calls for cooperation. The possibility of finding evidence to arrest Cohen seems to be a great interest to the government.