WSJ : Martoma Sentenced to Nine Years in Prison

Martoma Sentenced to Nine Years in Prison

Former SAC Capital Hedge-Fund Manager Also Ordered to Forfeit $9.38 Million


Mathew Martoma, center, and his wife arrive at federal court for a sentencing hearing in New York on Monday. Photo: Bloomberg
By CHRISTOPHER M. MATTHEWS
A federal judge sentenced Mathew Martoma to nine years in prison Monday, handing the former SAC Capital Advisors LP portfolio manager a stiff prison term in line with climbing punishments for insider trading.
The sentence gives the government another big win in its multiyear investigation into SAC and its billionaire founder, Steven A. Cohen.
Mr. Martoma, 40 years old, was convicted of taking part in what prosecutors say was one of the largest insider-trading schemes ever—illegal trades on two pharmaceutical companies that helped SAC and its traders book profits and avoid losses worth a total of $275 million.
Under federal guidelines, the profit or loss caused by a fraud plays a prominent role in sentencing recommendations. Because of the size of the scheme, Mr. Martoma faced as many as 20 years in prison under recommendations from the Manhattan federal court's probation office. Prosecutors argued that Mr. Martoma deserved a sentence of more than eight years in prison.
U.S. District Judge Paul Gardephe, who handed down the sentence after considering various factors, also ordered Mr. Martoma to forfeit $9.38 million.
Mr. Martoma is the eighth SAC employee convicted of insider trading. Most have pleaded guilty.
SAC itself pleaded guilty in November to criminal insider-trading charges and agreed to pay about $1.2 billion in new penalties. As part of the settlement, the firm said it would stop managing outside money. SAC has since changed its name to Point72 Asset Management.

>>> US Close Dow-0,15% S&P-0,31% Nasdaq +0,20% Russel +0,19%

Closing Market Summary: Stocks Begin Week on Cautious Note

The stock market started the first full week of September on a cautious note. The S&P 500 lost 0.3%, but the relative strength of small cap stocks helped the Russell 2000 (+0.2%) and Nasdaq Composite (+0.2%) finish ahead of the benchmark index.

Equity indices struggled from the get-go with the overall risk sentiment dampened by continued dollar strength that sent the US Dollar Index (+0.54, 84.28) near its best level of the year. The greenback surged on the back of yen weakness following a downward revision to Japan's Q2 GDP (to -7.1% from -6.8%), while also drawing strength from weakness in the British pound. The pound fell to 1.6110 from 1.6330 against the greenback after a weekend YouGov poll revealed majority support for Scottish independence with the referendum coming up on September 18.

Conversely, the dollar strength weighed on commodities with gold futures falling 0.9% to $1255.80/ozt. Similarly, crude oil also retreated, testing its 2014 low, before narrowing its loss to 0.7% by the pit close. The energy component settled at $92.64/bbl, but continued its rebound in electronic trading.

The early weakness in crude contributed to a defensive start for the energy sector (-1.6%), which ended near its worst level of the session. Dow components Chevron (CVX 126.21, -1.19) and ExxonMobil (XOM 97.77, -1.49) posted respective losses of 0.9% and 1.5% as the stronger dollar and cheaper oil weighed on earnings prospects of the two multinational giants.

Energy notwithstanding, other sectors ended much closer to their flat lines. The consumer discretionary sector (-0.5%) weighed amid weakness in the shares of Ford (F 16.80, -0.34) and General Motors (GM 33.24, -1.04) after Morgan Stanley downgraded the U.S. auto sector.

Elsewhere, the consumer staples sector (-0.6%) was pressured by Campbell Soup (CPB 43.39, -1.15), which fell 2.6% in reaction to an in-line report and disappointing guidance. Manufacturers of cosmetics also lagged after the CEO of L'Oreal (LRLCY 32.60, -0.73) made cautious comments about the industry. Peers Avon Products (AVP 13.66, -0.18) and Estee Lauder (EL 75.59, -1.19) lost 1.3% and 1.6%, respectively.

On the upside, the technology sector (+0.2%) outperformed throughout the session, which underpinned the Nasdaq. Top-weighted components like Google (GOOGL 601.63, +3.85), Microsoft (MSFT 46.47, +0.56), and Intel (INTC 35.33, +0.33) posted gains between 0.6% and 1.2%, while the top index member by weight—Apple (AAPL 98.35, -0.62)—lost 0.6%.

High-beta Nasdaq components also provided a measure of support with the PHLX Semiconductor Index adding 0.2% and the iShares Nasdaq Biotechnology ETF (IBB 273.06, +2.46) climbing 0.9%. Meanwhile, the broader health care sector (+0.1%) ended just above its flat line.

Treasuries rallied overnight, but spend the day in a steady retreat. The 10-yr note shed four ticks to boost its yield to 2.47%.

Participation remained light with fewer than 590 million shares changing hands at the NYSE floor.

Economic data was limited to the Consumer Credit report for July, which pointed to a $26.00 billion increase from an upwardly revised $18.80 billion (from $17.30 billion) in June, while the Briefing.com consensus expected an increase of $17.40 billion.

Tomorrow's data will be limited to the Job Openings and Labor Turnover Survey, which will be released at 10:00 ET.
  • Nasdaq Composite +10.0% YTD 
  • S&P 500 +8.3% YTD 
  • Dow Jones Industrial Average +3.2% YTD 
  • Russell 2000 +0.7% YTD

(BFW) *ACCELERATED BOOKBUILT OFFERING OF 23M SHRS IN ISS A/S

BN 09/08 15:14 *OTPP REMAINS ISS SHAREHOLDER WITH LONG TERM OUTLOOK
BN 09/08 15:13 *OTPP TO SELL 10% OF ISS SHRS SUBJECT TO MAX PROCEEDS OF EU50M
BN 09/08 15:11 *BANKS ACTING ON BEHALF OF FS INVEST II, OTPP
BN 09/08 15:10 *ISS BOOKBUILT OFFERING SEEN CLOSING ON SEPT. 9
BN 09/08 15:08 *BANKS ANNOUNCE OFFERING OF 23M ISS A/S SHRS TO INVESTORS
BN 09/08 15:07 *ACCELERATED BOOKBUILT OFFERING OF 23M SHRS IN ISS A/S
*ACCELERATED BOOKBUILT OFFERING OF 23M SHRS IN ISS A/S
2014-09-08 15:09:27.223 GMT

--JIM SILVER

-0- Sep/08/2014 15:09 GMT

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: CPB -3.2%.

Select UK listed names showing weakness following sell-off in FTSE: LYG -4.7%, RBS -4.3%, GSK -3.7%, BCS -3.5%, AZN -2.4%, RDS.A -1.9%, HSBC -1.9%, BP -1.8%, SHPG -1.6%, RIO -1.5%, ING -1.3%

Other news: WRLD -7.7% (disclosed KPMG would not respond to recent request for proposal to serve as independent registered public accounting firm), DGLY -5.9% (cont volatility), AKS -3.4% (announces concurrent offerings of 35 mln shares common stock and senior unsecured notes with aggregate value of $430 mln), XON -2.9% (files mixed securities shelf offering), UEC -2.2% (files shelf offering for ~1.86 mln shares of common stock ), TKMR -1.7% (negative mention on Mad Money)

Analyst comments: KERX -6% (downgraded to Underperform at FBR Capital ), F -2.5% (downgraded to Underweight at Morgan Stanley), HMY -2.5% (initiated with a Neutral at JP Morgan), GOLD -1.6% (initiated with a Neutral at JP Morgan)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: XCRA +2.1%

M&A news: MGAM +28.7% (to be acquired by Global Cash Access (GCA) for $36.50/share in cash), RAX +4.7% (CenturyLink (CTL) considering acquisition of RAX, according to reports)

Other news: MSTX +11.1% (announces positive top line results from Phase 2 study of AIR001), ISNS +7.3% (co and NuPark LLC announced that they have completed an integration and partnership agreement), ASTI +6.8% (files for 1 mln share common stock offering by selling shareholders), ALLT +5.1% (receives an expansion order of $15 mln from a Tier-1 Operator), HTZ +3.3% (announces Mark Frissora to step down as Chairman and CEO), BCRX +3.1% (announces RAPIVAB trial results for the treatment of influenza), YHOO +2.9% (rising in advance of BABA IPO release, also positive commentary on Mad Money), GLUU +2.7% (discloses it extended its licensing agreement with Kim Kardashian by three years), HIMX +1.9% (Google Glass on sale in GOOG Play store), NVAX +1.7% (presents data on RSV F Nanoparticle vaccine induced monoclonal antibody), GTAT +1.1% (Former GTAT employee Paul Matthews claims that GTAT sapphire covers are in AAPL iPhone 6, according to reports), SYN +1.1% (highlights SYN-005 data; SYN-005 neutralizing antibody combination protects against pertussis in murine and non-human primate models)

Analyst comments: INFN +4.6% (upgraded to Buy from Hold at Jefferies), FEYE +3.2% (upgraded to Buy from Neutral at UBS), MTRX +2.2% (upgraded to Buy from Hold at KeyBanc Capital Mkts), SGI +1.9% (upgraded to Buy at DA Davidson; tgt raised to $12), BAC +0.9% (upgraded to Buy from Neutral at Goldman), UBNT +0.9% (initiated with an Outperform at FBN Securities), TSLA+0.7% (initiated with an Outperform at FBN Securities), AIG +0.6% (initiated with a Buy at Citigroup)

>>> Campbell Soup reports EPS in-line, misses on rev; guides FY15 EPS below cons

Campbell Soup reports EPS in-line, misses on rev; guides FY15 EPS below consensus

Reports Q4 (Jul) earnings of $0.49 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate of $0.49; revenues rose 7.5% year/year to $1.85 bln vs. the $1.87 bln consensus.
  • Organic sales decreased 2%.
    • A breakdown of the change in sales follows: Acquisitions added 3% Increased promotional spending subtracted 2% Currency subtracted 1% The 53rd week added 7%
  • Excluding items impacting comparability in both periods, adjusted gross margin for the quarter was 34.3%, compared with 36.7% a year ago. The decline was primarily attributable to increased supply chain costs, cost inflation and higher promotional spending, partly offset by productivity improvements.
Co issues downside guidance for FY15, sees EPS of $2.45-2.50, excluding non-recurring items, vs. $2.57 Capital IQ Consensus; from the adjusted 52-week 2014 base, the co expects continuing operations to grow sales by 1 to 2%, adjusted EBIT to grow by 0 to 2% and adjusted EPS to grow by 0 to 2%.

>>> Multimedia Games to be acquired by Global Cash Access (GCA) for $36.50/share

Multimedia Games to be acquired by Global Cash Access (GCA) for $36.50/share in cash (31% premium); GCA sees deal immediately accretive

GCA will acquire all of the outstanding stock of Multimedia Games for $36.50 per share in cash, representing a 31% premium to the closing stock price as of Friday, Sept 5, 2014, for an aggregate purchase price of ~$1.2 billion. The proposed acquisition will be financed with debt and cash on hand for which GCA has secured committed debt financing. The proposed acquisition is subject to customary closing conditions, including receipt of MGAM shareholder approval and antitrust and gaming regulatory approvals, and is currently expected to be completed in early 2015.
  • The merger is expected to achieve ~$30 million of synergies as a combined entity; and, on a pro forma basis, is estimated to generate about $800 million in revenues and ~$217 million in Adjusted EBITDA based on the last twelve months results as of June 30, 2014.
  • The transaction is expected to be immediately accretive to GCA stockholders as of the closing date of the acquisition. Ram V. Chary will continue to serve as President and Chief Executive Officer of GCA.