NEW YORK — Jurors cannot be told that a former hedge fund portfolio manager fainted when federal agents first confronted him over insider trading allegations, a judge ruled Monday, saying such a "shocking and highly disturbing" encounter could dramatically affect someone regardless of guilt or innocence.
U.S. District Judge Paul Gardephe banned evidence about the fainting of Mathew Martoma from a trial that begins Tuesday when prospective jurors fill out questionnaires.
Martoma is charged with persuading a medical professor to leak secret data from an Alzheimer's disease trial between 2006 and 2008, while Martoma worked at SAC Capital Advisors, the hedge fund company founded by billionaire Steven A. Cohen. Prosecutors say the information enabled other investment professionals at SAC to earn a quarter-billion dollars illegally.
Martoma fainted when FBI agents approached him outside his Boca Raton, Fla., home in 2011, a year before he was arrested.
Gardephe said it would not be reasonable for jurors to infer that Martoma fainted because he knew he was guilty of insider trading.
"It is just as likely that he fainted simply from shock, surprise or alarm at being accused of such a serious crime, which could have such a damaging effect on his professional and personal life," he said.
The judge said there was significant risk a jury would give the evidence more value than it deserves as it deliberates charges of conspiracy and securities fraud.
Gardephe said it was "likely to be a shocking and highly disturbing event" when a hedge fund industry worker is approached by the FBI and accused of having engaged in insider trading in specific stocks.
