Mathew martoma worked as portfolio manager at S.A.C Capital Advisors (SAC), a hedge fun. In that capacity, Martoma managed an investment portfolio with buying power of between $400 and $500 million that was focused on pharmaceutical and health care companies. While at SAC, Martoma began to acquire shares in Elan and Wyeth (two pharmaceutical companies) for his portfolio. Martoma contacted expert networking firms and arranged paid consultation with doctors knowledgeable about Alzheimer’s disease, including two who who were working on the. bapineuzumab clinical trial. One was the chair of he safety monitoring committee for the bapineuzumab clinical trial and the other was the principal investigator of the clinical trial. Although both had a duty to keep the results of the clinical trial confidential and knew that martoma was an investment manager. they participated in more than 40 consultations with Martoma at the rate of over $1000 an hour. At these meetings, they provided Martoma with confidential updates of the drug’s safety at each stage of the safety monitoring committee’s investigation. Martoma made stock purchase and sale decisions based on the information he received. When Martoma was charged with trading on inside information in violation f $10(b) of the securities exchange Act of 1934 and rule 10 b-5, he argued that he should not be convicted because the government could not show a meaningfully close relationship between him and the doctors. Should Martoma be acquitted absent a showing of a meaningfully close relationship between him and the doctors? Explain
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