SEC v. CR Intrinsic Investors, LLC; Mathew Martoma; and Dr. Sidney Gilman, Southern District of New York (Mar. 18, 2013) — Complaint

Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint 
against defendants 
CR Intrinsic Investors, LLC ("CR Intrinsic"), Mathew Martoma 
("Martoma"), and Dr. Sidney Gilman ("Gilman"), and relief defendants CR Intrinsic 
Investments, LLC, S.A.C. Capital Advisors, LLC ("S.A.C. Capital"), S.A.C. Capital 
Sanjay Wadbwa 
Attorney for Plaintiff 
SECURITIES AND EXCHANGE COMMISSIO 
New York Regional Office 
3 
World Financial Center, Suite 400 
-New 
York, NY 10281-1022 
(212) 336-0181 
UNITED STATES 
DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

SECURITIES AND EXCHANGE COMMISSION, 
Plaintiff, 
-against-
CR INTRINSIC INVESTORS, LLC, 
MATHEW MARTOMA, 
and 
DR. SIDNEY GILMAN, 
Defendants, 
and 
CR INTRINSIC INVESTMENTS, LLC, 
S.A.C. CAPITAL ADVISORS, LLC, 
S.A.C. CAPITAL ASSOCIATES, LLC, 
S.A.C. INTERNATIONAL EQUITIES, LLC, 
and 
S.A.C. SELECT FUND, LLC, 
Relief Defendants. 
12 Civ. 8466 (VM) 
ECFCASE 
AMENDED 
COMPLAINT 

Associates, LLC, S.A.C. International Equities, LLC, and S.A.C. Select Fund, LLC 
(collectively, the "Relief Defendants''), alleges as follows: 
SUMMARY 
1. This is an insider trading case where affiliated investment advisers and 
their hedge funds made approximately $275 million in illegal profits or avoided losses in 
July 2008 by trading ahead ofa negative public announcement involving the clinical trial 
resUlts for an Alzheimer's drug being jointly developed by Elan Corporation, plc ("Elan") 
and Wyeth. 
2. Martoma, then a portfolio manager at 
CR Intrinsic, an unregistered 
investment adviser, perpetrated the scheme with Gilman, a professor 
of neurology at the 
University ofMichigan Medical SchooL Gilman served as the chairman ofthe Safety 
Monitoring Committee (the "SMC") overseeing the clinical trial, and was selected by 
Elan and Wyeth to present the 
final clinical trial results at a July 29, 2008 medical 
conference, which was to coincide with the after-market hours public announcement of 
the trial results by the two companies (the "July 29 Announcement"). 
3. Martoma met Gilman through paid consultations that took place between 
2006 and 2008, and were arranged 
by a New York-based expert network firm. During 
these consultations, Gilman provided Martoma with material nonpublic information 
about the ongoing clinical trial. 
In addition, starting on or around July 17, 2008, Gilman 
provided Martoma with the actual, detailed results 
ofthe clinical trial, in advance ofthe 
July 
29 Announcement. 
4. After Martoma received this information, he caused hedge fund portfolios · 
managed by 
CR Intrinsic as well as hedge fund portfolios managed by S.A.C. Capital not 
2 


only to liquidate their combined long positions in Elan and Wyeth, worth over $700 
million, but also to take substantial short positions, eventually selling over $960 million 
in Elan and Wyeth securities 
in just over a week. This massive re-positioning allowed 
the 
CR Intrinsic and S.A.C. Capital hedge funds to collectively reap illicit profits and 
avoid losses 
ofapproximately $275 million. 
5. These illicit gains resulted from trades placed 
by or on behalfofthe CR 
Intrinsic portfolios controlled by Martoma, and the S.A.C. Capital portfolios controlled 
by that entity's portfolio manager ("Portfolio Manager A"), who collaborated closely 
with Martoma 
in making the trading decisions. 
6. 
At the end of2008, Martoma received a $9.3 million bonus, a significant 
portion 
ofwhich was attributable to the illegal profits that the CR Intrinsic and S.A.C. 
Capital hedge funds had generated in this scheme. 
7. Gilman received over $100,000 from the expert network 
firm for his 
consultations with Martoma and others 
at CR Intrinsic and S.A.C. Capital. 
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 
8. The Commission brings this action pursuant to the authority conferred 
upon 
it by Section 20(b) ofthe Securities Act of 1933 ("Securities Act") [15 U.S.C. § 
77t(b)] and Section 21(d) ofthe Securities Exchange Act of 1934 ("Exchange Act") [15 
U.S.C. 
§ 78u(d)]. The Commission seeks permanent injunctions against each ofthe 
defendants (other than Gilman as to 
whom a judgment ordering permanent injunctions 
was entered by the Court 
on November 21, 2012), enjoining them from engaging in the 
transactions, acts, practices, and courses 
ofbusiness alleged in this Complaint, and 
disgorgement, 
on a joint and several basis, ofall ill-gotten gains, including profits 
3 


realized and losses avoided from the unlawful insider trading activity set forth in this 
Complaint, together with prejudgment interest (other than Gilman as to whom a judgment 
ordering disgorgement 
ofGilman's ill-gotten gains, together with prejudgment interest, 
was entered 
by the Court on November 21, 2012). The Commission also seeks civil 
penalties against each 
ofthe defendants pursuant to Section 21A ofthe Exchange Act [15 
U.S.C. § 78u-1]. The Commission seeks any other relief the Court 
may deem appropriate 
pursuant 
to Section 21(d)(5) ofthe Exchange Act [15 U.S.C. § 78u(d)(5)]. 
JURISDICTION AND VENUE 
9. This Court has jurisdiction over this action pursuant to Sections 20(b ), 
20(d), and 22(a) 
ofthe Securities Act [15 U.S.C. §§.77t(b), 77t(d), and 77v(a)] and 
Sections 21(d), 21(e), and 27 
ofthe Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 
78aa]. 
10. Venue lies 
in this Court pursuant to Sections 20(b) and 22( a) ofthe 
Securities Act [15 U.S.C. §§ 77t(b) and 77v(a)], 
and Sections 21(d), 21A, and 27 ofthe 
Exchange 
Act [15 U.S.C. §§ 78u(d), 78u-1, and 78aa]. Certain ofthe acts, practices, 
transactions, and courses 
ofbusiness alleged in this Complaint occurred within the 
Southern District 
ofNew York. The expert network firm, which arranged telephone calls 
between Martoma and Gilman, and paid Gilman for the consultations, is headquartered 
in 
New York, New York. An affiliate.ofS.A.C. Capital has an office in New York, New 
York, and Martoma occasionally used this office, including for one meeting with Gilman. 
During the time 
ofthe conduct at issue, Wyeth and Elan securities were listed on the New 
York Stock Exchange (the "NYSE"), which is located inNew York, New York. 
4 


DEFENDANTS 

11. 
CR Intrinsic is an unregistered investment adviser located in Stamford, 
Connecticut and an affiliate 
ofS.A.C. Capital. 
12. 
Martoma, age 38, resides in Boca Raton, Florida. Martoma worked at 
CR Intrinsic between 2006 and 2010, serving as a portfolio manager from at least January 
1,  2008 until his departure from 
CR Intrinsic in 2010. At all relevant times, Martoma had 
trading authority over certain portfolios at 
CR Intrinsic. 
13. 
Gilman, age 80, resides in Ann Arbor, Michigan. Gilman is a medical 
doctor 
by training, and a professor ofneurology at the University ofMichigan Medical 
School. Gilman served as a consultant to Elan and Wyeth from 2003 until2009, when 
Elan sold its interest in certain drugs to Jannsen/Pfizer. Gilman also moonlighted as a 
consultant for the expert network firm and was paid approximately $1,000 per hour for 
his consultations. 
RELIEF DEFENDANTS 
14. 
CR Intrinsic Investments, LLC is a hedge fund affiliated with CR 
Intrinsic that benefitted from the illegal insider trades in Elan and Wyeth securities that 
Martoma and 
CR Intrinsic caused to be executed in July 2008. 
15. S.A.C. 
Capital is an investment adviser located in Stamford, Connecticut 
that managed certain affiliated hedge funds that benefitted from the illegal insider trades 
in Elan and Wyeth securities Martoma and CR Intrinsic caused to be executed in July 
2008, and obtained increased fees as a result 
ofthe illicit gains from these trades. 
5 


16. S.A.C. Capital Associates, LLC is a hedge fund that in July 2008 was 
affiliated with S.A.C. Capital and that benefitted from the illegal insider trades in Elan and 
Wyeth securities that Martoma and 
CR Intrinsic caused to be executed at that time. 
17. S.A.C. 
International Equities, LLC is a hedge fund that in July 2008 was 
affiliated with S.A.C. Capital and that benefitted from the illegal insider trades 
in Elan and 
Wyeth securities that Martoma and 
CR Intrinsic caused to be executed at that time. 
18. S.A.C. Select 
Fund, LLC is a hedge fund that in July 2008 was affiliated 
with S.A.C. Capital and that benefitted from the illegal insider trades in Elan and Wyeth 
securities that Martoma and 
CR Intrinsic caused to be executed at that time. 
1 
RELEVANT ENTITIES AND INDIVIDUAL 
19. 
Elan is a biotechnology company incorporated in Ireland, with its 
principal place ofbusiness 
in Dublin, Ireland. Elan's Ordinary Shares trade on the Irish 
Stock Exchange and the London Stock Exchange and its American Depositary Receipts 
("AD~")-each representing one Ordinary Share-trade on the NYSE under the 
symbol "ELN." Elan has reported as a foreign issuer since at least 1996. 
20. 
Wyeth was a pharmaceutical company incorporated in Delaware with its 
principal place ofbusiness in Madison, New Jersey. Wyeth's securities were registered 
with the Commission pursuant to Section 12(b) 
ofthe Exchange Act and its stock traded 
on the NYSE under the symbol "WYE" until Wyeth was acquired by Pfizer 
in 2009. 
21. Portfolio 
Manager A is the owner and founder of S.A.C. Capital and CR 
Intrinsic. 
1 
CR Intrinsic Investments, LLC, S.A.C. Capital Associates, LLC, S.A.C. International 
Equities, LLC, and S.A.C. Select Fund, LLC are herein collectively referred to as the 
"S.A.C. Capital and 
CR Intrinsic Funds." · 
6 


FACTS 

Non-Public Clinical Trials for Alzheimer's 
Drug Conducted by Elan and Wyeth 
22. Before a phannaceutical company can release a new drug, it must conduct 
clinical trials to determine whether the drug is safe and effective 
in providing treatment to 
patients. Clinical trials generally proceed in three phases. 
In Phase I,  a trial tests the drug 
on a small group ofpeople (generally, 20-80) to determine its safety, determine a safe 
dosage range, and identify side-effects. 
In Phase II, the drug is given to a larger group of 
people (generally, 200-300) to determine ifit is effective and further evaluate its safety. 
Finally, in Phase III, the drug is given to large groups 
ofpeople to confirm its 
effectiveness, its safety and to monitor any side-effects. 
23. Between 2006 and 2008, Elan and Wyeth jointly conducted a Phase II 
clinical trial for a potential drug to treat Alzheimer's disease called bapineuzumab 
("bapi") (the "Phase II Trial"). The Phase II Trial was designed to assess the safety and 
tolerability 
ofbapi in mild-to-moderate Alzheimer's disease, and to explore bapi's 
efficacy at a range 
of doses. 
24. Elan and Wyeth released top-line results ofthe Phase II Trial on June 17, 
2008 (the "June 17 Announcement"), and released the detailed final results 
ofthe trial in 
the July 29 Announcement. The market reacted positively 
to the June 17 Announcement; 
the day after the announcement, the stock prices 
ofElan and Wyeth rose more than 10% 
and 4%, respectively. However, following the June 17 Announcement, investors were 
immediately looking ahead to the expected release 
ofthe detailed results on July 29. As 
one analyst put it, the 
"[p]resentation ofmore complete data at [a scheduled conference 
on Alzheimer's disease] at the end ofJuly will be a much anticipated event as investors 
7 


should gain much greater insight into the drug's safety and efficacy profile as well as 
whether there may be the possibility for an accelerated registration strategy." 
25. Despite the market's positive reaction to the June 
17 Announcement, the 
more detailed July 29 Announcement failed to meet the market's expectations and caused 
the stock price 
ofElan to plummet approximately 42% and the stock price ofWyeth to 
drop almost 12% by the end 
ofthe day following the announcement. 
Gilman's Access to Material Nonpublic Information Concerning the Phase II Trial 
and his Duty of Confidentiality 
26. Gilman, who served as a consultant for Elan, had continuing access to 
material nonpublic information concerning the Phase II Trial. First, Gilman served as the 
chairman 
ofthe Phase II Trial's SMC, which met regularly between 2006 and 2008 to 
discuss the health ofthe trial participants. In addition, Gilman agreed to present, on 
behalf
ofElan and Wyeth, the Phase II Trial results at the International Conference on 
Alzheimer's Disease (the "ICAD"), a medical conference that was scheduled to be held 
on July 29, 2008. As a result of agreeing to serve as the presenter at the ICAD, Gilman 
was given access to the full Phase II Trial results approximately two weeks prior to the 
July 29 Announcement. Elan paid Gilman approximately $79,000 for his consultations 
concerning bapi 
in 2007 and 2008. 
27. 
By virtue ofhis roles in the clinical trial, and in accordance with the terms 
ofhis contract with Elan, Gilman owed Elan a duty to hold in strict confidence all 
information he learned in connection with his participation 
in the clinical trial and to use 
such information only for Elan's benefit. The consulting agreement between Elan and 
Gilman provided that 
"[a]ny and all information which Elan may disclose to Consultant 
under this Agreement will be considered confidential 
...."  In addition, the SMC 
8 


Operating Guidelines, to which Gilman was subject, provided that "strict confidentiality 
will 
be maintained by all the SMC members in accordance with written agreement with". 
Elan. 
28. Gilman also received training 
on the prohibitions ofthe federal securities 
laws from the expert network firm, which repeatedly reminded Gilman not to share 
nonpublic information with clients. Emails sent to Gilman by the expert network firm 
also listed bapi as a topic that Gilman was ''not allowed to discuss." 
Gilman Provides Martoma Material Nonpublic Information Concerning the 
Phase 
II Trial 
29. Gilman first met Martoma through paid consultations arranged by the 
expert network 
finn. Between 2006 and 2009, Gilman 'earned approximately $108,000 
from fifty-nine consultations with portfolio managers and analysts at CR Intrinsic and 
S.A.C. Capital, including forty-two consultations 
just with Martoma. Over time, Gilman 
developed a personal relationship with Martoma, eventually coming to view Martoma as 
a friend and pupiL 
30. Gilman provided Martoma with material nonpublic information 
concerning the Phase II Trial starting 
in at least 2007. As a member ofthe SMC, Gilman 
received periodic updates from Elan concerning nonpublic safety data for the ongoing 
trial. For example, 
in advance ofeach SMC meeting, Elan sent Gilman a PowerPoint 
presentation that included dosage information, and information concerning side-effects 
that patients 
in the Phase II Trial were experiencing. 
31. Starting 
in at least 2007, Gilman would call Martoma after an SMC 
meeting to share with Martoma what he had just learned during the meeting. During 
these calls, Gilman discussed the PowerPoint presentations and provided Martoma with 
9 


his perspective on the results. Gilman's consultations with Martoma frequently occurred 
on the same day or shortly after Gilman had attended the SMC meeting. For example, 
Gilman had consultations with Martoma 
on February 9, 2007 (the day following an SMC 
meeting), October 9, 
2007 (less than three hours after an SMC meeting), and March 18, 
2008 
(three hours after an SMC meeting). 
32. Martoma and Gilman coordinated their expert network consultations 
around scheduled SMC meetings. For example, on August 
23,2007, Gilman emailed 
Martoma, saying "[t]he SMC teleconference will be postponed until the following week. 
Should we postpone our planned teleconferences until a more definitive date [for the 
SMC teleconference] has been established?" Likewise, when the SMC meeting was not 
rescheduled as expected, Gilman emailed Martoma 
on September 5, 2007 to report that 
the SMC meeting had still not been scheduled and noted to Martoma, "you may want to 
postpone [our scheduled conference call] until there is more to discuss." Gilman next 
consulted with Martoma through the expert network firm 
on October 9, 2007-three 
hours after the next SMC meeting. 
33. On at least one occasion prior to July 2008, Gilman emailed Martoma 
concerning specific -and as yet nonpublic -data from the Phase II Trial that Gilman 
had obtained from a PowerPoint presentation from Elan. The email to Martoma, which 
Gilman labeled "For Your Eyes Only" and "High Priority," explicitly referenced the 
dropout rate for the bapi clinical trial 
and referred to how many patients took bapi during 
each round 
ofthe trial. The figures used in the email (including certain mathematical 
errors) were taken directly from a slide 
in the Elan-prepared PowerPoint presentation 
used 
at the March 18, 2008 SMC meeting. 
10 


34. Martoma and Gilman also took steps to conceal the true topic oftheir 
conversations from the expert network firm. For example, when Martoma scheduled a 
consultation with Gilman three hours after the March 18, 2008 SMC meeting, Martoma 
reported to the expert network firm that the purpose 
ofthe call was "Follow-up with Dr. 
Gilman: AAN Abstract Preview" even though Martoma and Gilman had discussed the 
Phase II Trial during the consultation. Later, 
in advance ofa consultation that Gilman's 
personal calendar noted was to discuss side-effects that the Phase II Trial was finding in 
patients taking bapi, Gilman emailed Martoma 
and asked him to set up a consultation 
with the expert network firm, suggesting that Martoma tell 
the expert network firm that 
the consultation was to discuss a drug 
to treat Parkinson's disease. 
The CR Intrinsic and S.A.C. Capital Portfolios Establish Long Positions in Elan and 
Wyeth 
Prior to July 2008 
35. Throughout 2007 and up to July 2008, the CR Intrinsic and S.A.C. Capital 
portfolios established substantial long positions 
in Elan and Wyeth securities. As ofJune 
30,2008, the CR Intrinsic portfolios owned over $233 million worth ofElan securities 
and over $80 million 
ofWyeth stock. The combined holdings in Elan and Wyeth 
securities represented approximately 14% 
ofthe CR Intrinsic portfolios' entire equity 
position 
at that time. Similarly, as ofJune 30, 2008, the S.A.C. Capital portfolios owned 
over $293 million 
of Wyeth stock and over $95 million ofElan securities, which 
represented over 
4% ofthe S.A.C. Capital portfolios' entire equity position at that time. 
11 


Finally, in addition, the S.A.C. Capital portfolios also held an equity swap position with 
respect to 12 million shares 
of Wyeth stock. 
2 
36. CR Intrinsic's and S.A.C. Capital's Elan and Wyeth positions were held 
primarily in portfolios controlled 
by Martoma and Portfolio Manager A, respectively. 
Martoma included Elan and Wyeth as "long ideas" 
in his weekly portfolio updates 
circulated between January 1, 2008 and early July 2008 to Portfolio Manager A, among 
others, and listed the release 
ofthe Phase II Trial results as an "[u]pcoming catalyst." 
Portfolio Manager A invested in Elan and Wyeth securities based in part 
on the advice of 
Martoma. 
37. Martoma and Portfolio Manager A maintained their bullish positions in 
Elan and Wyeth even though there was significant dissent within 
CR Intrinsic and S.A.C. 
Capital 
on the wisdom ofa large unhedged investment in Elan and Wyeth securities. In 
March and April of2008, two analysts at CR Intrinsic repeatedly sent emails to Portfolio 
Manager A advocating against the Elan and Wyeth positions and suggesting trading 
strategies designed to hedge them. 
38. 
For example, on March 26,2008, one ofthese analysts sent Portfolio 
Manager A 
an email with the subject line "ELN, (important, please read) negative reads 
from company and other buysiders" and listed several reasons why the analyst was 
concerned with the Elan position. Portfolio Manager A forwarded the email to Martoma, 
who responded, 
"I read the message. Nothing worrisome here. Let me know when you 
2 
An equity swap is a transaction, typically entered into with a broker-dealer, where a 
party receives cash flow based 
on the performance ofthe underlying equity for a 
specified period 
oftime in exchange for paying a premium to the broker-dealer. 
Generally, a party will sell its equity position and buy the economic interest on the shares 
it sold via an equity swap when it desires to free up cash. 
12 


are free to discuss in detaiL" Martoma and Portfolio Manager A made no changes to 
their holdings despite the analysts' concerns. 
In fact, after the Jtme 17 Annotmcement, 
Portfolio Manager A indicated he would no longer consider any investment ideas in Elan 
or Wyeth from these two CR Intrinsic analysts. 
Gilman's July 2008 Communications with Martoma Concerning the Trial Results 
39. Martoma maintained his bullish view ofElan after the June 17 
Annotmcement. 
In fact, in a June 30, 2008 email (sent when Elan securities were trading 
at approximately $35 per share), Martoma told Portfolio Manager A that he intended to 
add further 
to the Elan position, saying, "I think stock breaks $40 ..." following the July 
29 Announcement. 
40. 
In late June, Gilman learned that he likely would be selected to present the 
Phase II Trial results 
at the ICAD on July 29. After finding out about his selection, 
Gilman sent an email to Martoma with the subject line 
"Some news" and told Martoma to 
"[p]lease set up [an expert network finn] conversation re MS." During this consultation 
-purportedly about MS -Gilman informed Martoma that he would be the presenter 
ofthe final clinical trial results at the ICAD on July 29. After being named the presenter, 
Gilman arranged to travel 
to Elan's offices on July 15 and 16,2008, so that he could 
learn the full results 
ofthe Phase II Trial. 
41. Thereafter, 
in the weeks leading up to the July 29 Announcement, Gilman 
had several telephone calls with Martoma during which 
he provided Martoma with 
material nonpublic information regarding not only the safety results, but also the efficacy 
results for the Phase II Trial. For example, 
on Friday, July 11,2008, Gilman participated 
in an SMC meeting in which the safety results for the completed Phase II Trial as a whole 
13 


were discussed. Two days later, on Sunday, July 13, Gilman spoke with Martoma for 
more than 1 hour and 40 minutes. During this call, Gilman provided confidenti;li 
information to Martoma concerning the completed Phase II Trial safety results. Gilman, 
in fact, explicitly noted in his electronic calendar that the purpose ofthis call with 
Martoma was to discuss "SAEs 
in hap" -referring to serious adverse effects, also 
known as side-effects, found 
in patients taking bapi. 
42. Towards the end 
ofthe July 13 call, Martoma and Gilman each created 
Outlook Calendar entries reflecting that they intended to speak again 
on July 17, 2008 ­
the day after Gilman returned from his scheduled meetings with Elan. 
43. On July 15,2008, Gilman traveled to San Francisco 
in a private plane 
arranged by Elan to participate in two days 
ofmeetings concerning the Phase II Trial 
efficacy results. During these meetings, Gilman was briefed on the complete efficacy 
results 
ofthe trial, and also reviewed and commented upon a PowerPoint presentation 
that he would use to present the results at the ICAD. 
44. On July 17, 2008, after Gilman returned to Ann Arbor, an Elan officer sent 
Gilman an updated ICAD Power Point presentation in an email labeled "Confidential, Do 
Not Distribute." The twenty-four page PowerPoint included summaries ofthe detailed 
efficacy results and safety results for the Phase II Trial as well as additional commentary 
on how Elan and Wyeth were interpreting the data. 
45. Later in the afternoon of July 17, 2008, Gilman and Martoma had another 
lengthy phone call during which Gilman provided Martoma with confidential information 
regarding the detailed results 
ofthe Phase II Trial, including all the information contained 
in the Power Point presentation. At or about 3:00 pm on July 17, 2008, Martoma was 
14 


picked up at S.A.C. Capital's New York office for a one-way trip to his home in 
Greenwich, Connecticut. At 4:15 pm, Martoma called Gilman from his home phone and 
talked to Gilman for approximately 1 hour and 
45 minutes. 
46. Shortly after this call, Gilman sent the PowerPoint presentation to 
Martoma Martoma subsequently called Gilman to request the password needed to open 
the encrypted file, which Gilman provided. 
4 7. Gilman and Martoma continued to communicate after their July 
17 
conversation in the days leading up to the July 29 Announcement. In addition to three 
short calls on July 18, Martoma and Gilman had a 39-minute conversation on July 22, a 
23-minute conversation 
on July 24, and an approximately 11-minute conversation the day 
before the July 29 Announcement. 
Martoma, CR Intrinsic, and S.A.C. Capital Trade Elan and Wyeth Securities Based 
on the Material Nonpublic Information from Gilman 
48. On the morning of Sunday, July 20, 2008, following his July 17 and 18 
calls with Gilman, Martoma sought to speak with Portfolio Manager A about the Elan 
positions that the 
CR Intrinsic and S.A.C. Capital portfolios had amassed to that point, 
telling Portfolio Manager A 
by email that "[i]t's important" that they speak. Martoma 
and Portfolio Manager A thereafter spoke for nearly 20 minutes. Martoma indicated to 
Portfolio Manager A that Martoma was no longer "comfortable" with the. Elan 
investments held by the 
CR Intrinsic and S.A.C. Capital portfolios. 
49. On Monday, July 21, 2008, Portfolio Manager 
A's head trader at S.A.C. 
Capital (the "Head Trader") began selling Elan and Wyeth securities held in the CR 
Intrinsic and S.A.C. Capital portfolios that Martoma and Portfolio Manager A controlled. 
Before the market opened on July 21, 2008, these portfolios held over 10.5 million Elan 
15 


securities worth over $365 million and over 7.1 million Wyeth shares worth over $335 
million, for a total position size 
ofover $700 million. 
50. At Portfolio Manager 
A's direction, the trades that the Head Trader. 
executed in Elan and Wyeth securities between July 
21 and July 29,2008 were kept 
confidential even within 
CR Intrinsic and S.A.C. Capital. For example, on July 21, 2008, 
the Head Trader emailed Martoma concerning the sales: "obviously no one knows except 
me[,] 
you and [Portfolio Manager A]." Later, after the Head Trader sold CR Intrinsic's 
and S.A.C. Capital's portfolios' existing position in Elan, the Head Trader reported to 
Portfolio Manager A that "[w]e executed a sale 
ofover 10.5 million ELN for [various 
portfolios at 
CR Intrinsic and S.A.C. Capital] at an avg price of34.21. This was executed 
quietly and efficiently over a 4 day period through algos and darkpools and booked into 
two firm accounts that have very limited viewing access." 
51. Martoma also urged Portfolio Manager A and the Head Trader to sell the 
Elan securities in the 
CR Intrinsic and S.A.C. Capital portfolios quickly. For example, on 
July 22, ten minutes after the Head Trader called Martoma, Martoma sent Portfolio 
Manager A 
an instant message at 1:22:34 p.m. saying, "would do more today if 
possible[,]" suggesting that Portfolio Manager A sell more Elan ADRs. At 1 :22:50 p.m., 
Portfolio Manager A responded, 
in relevant part, "we are done on 2.3 today[.]" Martoma 
replied, "my sense is today-thurs are best days so ifpossible to do more, would do so[.]" 
After receiving Martoma's message, Portfolio Manager A sold over an additiona12.2 
million Elan 
ADRs on July 22. 
52. In total, between July 21, 2008 and July 29, 2008 (the last trading day 
before the post-market July 29 Announcement), the 
CR Intrinsic and S.A.C. Capital 
16 


portfolios sold over 15 million Elan securities for gross proceeds ofover $500 million. 
Although the investment advisers' portfolios achieved a zero balance in Elan securities 
by July 25, 2008, they continued to sell short Elan securities until the July 29 
Announcement.
3 
By the close ofthe market on July 29,2008, the CR Intrinsic and 
S.A.C. Capital portfolios had a combined short position 
ofapproximately 4.5 million 
Elan securities. The trading 
by the CR Intrinsic and S.A.C. Capital portfolios in Elan 
securities constituted over 20% 
ofthe reported trading volume in the seven days prior to 
the July 29 Announcement. 
53. 
In addition, between July 21, 2008 and July 29, 2008, the CR Intrinsic and 
S.A.C. Capital portfolios sold over 10.4 million shares 
ofWyeth for gross proceeds of 
over $460 million, including over 6.1 million Wyeth shares worth over $270 million 
during the very day 
ofthe July 29 Announcement. As a result ofthese sales, the CR 
Intrinsic and S.A.C. Capital portfolios had a zero balance in Wyeth stock during the 
trading day on July 29,2008, 
but continued to place short sales that day. By the close of 
the marketon July 29, 2008, the CR Intrinsic and S.A.C. Capital portfolios had a 
combined short position 
ofapproximately 3.3 million Wyeth shares. The trading by the 
CR Intrinsic and S.A.C. Capital portfolios in Wyeth securities constituted over 11% of 
the reported trading volume in the seven days prior to the July 29 Announcement. 
. 54. The chart 
belowsummarizes CR Intrinsic's and S.A.C. Capital's 
portfolios' combined equity positions 
in Elan and Wyeth before the markets opened on 
3 
To "sell short" is to sell a security that one does not own, but rather has arranged to 
borrow from a third party, with the intention 
ofpurchasing (also called "covering") the 
security at a later date to deliver to the lender. A short seller stands to gain 
ifthe price of 
the security declines between the short sale and the purchase because the short seller has 
sold the security at a price that is greater than the purchase price. 
17 


July 21,2008, and the trading with respect to those securities prior to the July 29 
Announcement: 
Description Elan 
ADRs 
Wyeth Stock 
Equity Positions Before Trading 
Opened On July 
21,2008 
> 10.5 million shares 
>
7.1 million shares 
Value 
ofEquity Positions >$365 million 
>$335 million 
Sales (Long and Short) between 
July 
21 and July 29 
>
15 million shares 
>10.4 million shares 
Total Sales Proceeds >$500 million 
>$460 million 
Short Position Held Prior to July 
29 Announcement 
4.5 million shares 
3.3 million shares 
Percentage 
ofMarketwide Sales 
Volume 
>20% 
>11% 
55. 
CR Intrinsic and S.A.C. Capital also placed options trades in Elan ADRs 
that bet on the 
ADR share price going down. For example, on July 28 and July 29, the 
CR Intrinsic and S;A.C. Capital portfolios purchased over $1 million worth ofElan put 
options with strike prices below the Elan 
ADR share price on those trading days. 
4 
Elan and Wyeth Issue a Negative Announcement Concerning the Phase II Trial 
. 56. On July 29, 2008, after the close ofU.S. securities markets, Gilman 
presented the results ofthe Phase II Trial at the ICAD, and Elan and Wyeth issued a press 
release summarizing the results. Although Elan and Wyeth emphasized the positive 
aspects 
ofthe trial, the press release and Gilman's presentation included additional details 
4 
A put option is a financial contract between two parties that gives the buyer the right, 
but not the obligation, to sell 
an agreed quantity ofstock during a specified time period at 
a specified price. A buyer 
ofa put option pays a premium to purchase this right, and 
generally stands to gain 
ifthe price ofthe stock decreases. 
18 


not included in the June 17 Announcement, and the market reacted negatively to the full 
results. 
57. On July 30, 2008, the first trading day after the July 
29 Announcement, 
Elan's share price fell from $33.75 (the closing price on the day ofthe announcement) to 
$19.63 (the closing price 
on the day after the announcement), a decline ofapproximately 
42%. Wyeth's stock price fell from $45.11 (the closing price 
on the day ofthe 
announcement) to $39.7 4 (the closing price the day after the announcement), a decrease 
ofapproximately 12%. 
Profits Reaped and Losses Avoided by CR Intrinsic and S.A.C. Capital 
58. As a result ofthe trades that were entered into during the period between 
Martoma's conversation with Gilman 
on July 17, 2008 and the July 29 Announcement, 
CR Intrinsic and S.A.C. Capital portfolios in which Martoma and Portfolio Manager A 
had trading authority reaped profits and avoided losses 
ofapproximately $275 million as 
follows (figures are approximate): 
Description 
£/au Wretfl 
Profits from Short Sales 
$59.2 million 
$16 million 
Profits from Option Trades $5.1 million 
N/A 
Losses A voided 
$154.2 million 
$40.4 million 
Total Illicit Gain $218.5 million 
$56.4 million 
59. Following certain allocations made after the July 29 Announcement, the 
· profits and avoided losses were distributed roughly evenly between the 
CR Intrinsic 
portfolios, which reaped profits and avoided losses 
ofapproximately $138 million, and 
19 


the S.A.C. Capital portfolios, which reaped profits and avoided losses of approximately 
$137 million. 
Martoma's Reward for His Profitable Trades and His Departure From CR Intrinsic 
60. At the end of2008, Martoma received a bonus ofover $9.3 million that 
included a percentage 
of the Elan trading profits in the CR Intrinsic portfolios, as well as 
a share 
ofthe Elan profits in certain S.A.C. Capital portfolios. 
61. In contrast to 2008, which had been a banner year for him, Martoma was 
unable to generate such winning trades 
or outsized returns in 2009 and 2010, and did not 
receive a bonus in either 
ofthose years. In a 2010 email suggesting that Martoma's 
_employment 
be terminated, a S.A.C. Capital officer stated that Martoma had been a "one 
trick pony with Elan." 
CLAIMS FOR RELIEF 

CLAIM I 

Violations 
of Section lO(b) ofthe Exchange Act and Rule lOb-S Thereunder 

(Against Defendants CR Intrilisic, Martoma, and Gilman) 

62. The Commission realleges and incorporates by reference paragraphs 1 
through 61, as though fully set forth herein. 
63. The information provided by Gilman to Martoma concerning the Phase II 
Trial was, 
in each case, material and nonpublic. In addition, the information was, in each 
case, considered confidential by Elan and the SMC for the Phase II Trial, which were the 
sources 
ofthe information, and Elan and the SMC had policies protecting confidential 
information. 
20 


64. Gilman provided the material nonpublic information to Martoma in breach 
ofthe fiduciary duty that Gilman owed to Elan and the SMC, and did so with the 
expectation 
ofreceiving a benefit. 
65. Martoma knew, recklessly disregarded, or should have known, that 
Gilman owed a fiduciary duty, or obligation arising from a similar relationship oftrust 
and confidence, to keep the information confidential. 
66. Martoma and 
CR Intrinsic each caused the .S.A.C. Capital and CR Intrinsic 
Funds to trade based 
on material nonpublic information concerning the Phase II  Trial, 
with the expectation 
ofa benefit from doing so, and each knew, recklessly disregarded, or 
should have known, that the information was conveyed in breach ofa fiduciary duty, or 
obligation arising from a similar relationship 
oftrust and confidence .. 
67. Martoma and CR Intrinsic each knew, recklessly disregarded, or should 
have known, that the material nonpublic information concerning the Phase II Trial 
that 
each received from their respective tippers was disclosed or misappropriated in breach of 
a fiduciary duty, or similar relationship oftrust and confidence. 
68. 
CR Intrinsic, Martoma, and Gilman are jointly and severally liable for the 
trading 
ofthe S.A.C. Capital and CR Intrinsic Funds because they each directly or 
indirectly effectuated the trades on behalf 
ofthe funds and/or unlawfully disclosed the 
material nonpublic information to the funds. 
69. By virtue 
ofthe foregoing, defendants CR Intrinsic, Martoma, and 
Gilman, and each 
ofthem, in connection with the purchase or sale of securities, by the 
use 
ofthe means ·or instrumentalities ofinterstate commerce, or ofthe mails, or a facility 
ofa national securities exchange, directly or indirectly: (a) employed devices, schemes 
21 


or artifices to defraud; (b) made untrue statements ofmaterial fact or omitted to state 
material facts necessary 
in order to make the statements made, in the light ofthe 
circumstances under which they were made, not misleading; or (c) engaged in acts, 
practices 
or courses ofbusiness which operated or would have operated as a fraud or 
deceit upon persons. 
70. 
By virtue oftQ.e foregoing, defendants CR Intrinsic, Martoma, and 
Gilman, and each 
ofthem, directly or indirectly, violated, and unless enjoined, will again 
violate, Section 10(b) 
ofthe Exchange Act [15 U.S.C. § 78j(b)] and Rule lOb-5 
thereunder [17 C.F.R. 
§ 240.10b-5]. 
CLAIM II 

Violations of Section 17(a) ofthe Securities Act 

(Against Defendants CR Intrinsic, Martoma, and Gilman) 

71. The Commission realleges and incorporates by reference paragraphs 1 
through 70, as though fully set forth herein. 
72. 
By virtue ofthe foregoing, in the offer or sale ofsecurities, by the use of 
means or instruments oftransportation or communication in interstate commerce or by 
the use ofthe mails, directly or indirectly, defendants CR Intrinsic, Martoma, and 
Gilman, and each 
ofthem: (a) employed devices, schemes or artifices to defraud; (b) 
obtained money 
or property by means ofan untrue statement of a material fact or omitted 
to state a material fact necessary in order to make the statements. made, in light ofthe 
circumstances under which they were made, not misleading; and (c) engaged in 
transactions, practices 
or courses ofbusiness which operate or would operate as a fraud 
or deceit upon a purchaser. 
22 


73. By reason ofthe conduct described above, each ofthe defendants directly 
or indirectly violated, and unless enjoined will again violate, Section 17(a) 
ofthe 
Securities Act [15 U.S.C. 
§ 77q(a)]. 
CLAIM III 

Unjust Enrichment 

(Against Relief Defendants) 

74. The Commission realleges and incorporates by reference paragraphs 1 
through 73, as though fully set forth herein. 
75. Each 
ofthe S.A.C. Capital and CR Intrinsic Funds earned profits or 
avoided losses as a result 
ofthe violations by CR Intrinsic, Martoma, and Gilman, as 
alleged above, under circumstances 
in which it is not just, equitable or conscionable for 
the S.A.C. Capital and CR Intrinsic Funds to retain the funds. As a result ofthe 
foregoing, the S.A.C. Capital and 
CR Intrinsic Funds were unjustly enriched. 
76. S.A.C. Capital earned increased fees as a result 
ofthe violations by CR 
Intrinsic, Martoma, and Gilman, as alleged above, under circumstances in which it is not 
just, equitable or conscionable for S.A.C. Capital to retain the funds. As a result ofthe 
foregoing, S.A.C. Capital was unjustly enriched. 
RELIEF SOUGHT 
WHEREFORE, 
the Commission respectfully requests that this Court enter a 
Final Judgment: 
I. 
Permanently restraining and enjoining defendants CR Intrinsic and Martoma, and 
each 
ofthem, from violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and 
Rule lOb-5 thereunder [17 C.F.R. 
§ 240.10b-5]; 
23 


II. 
Permanently restraining and enjoining defendants CR Intrinsic and Martoma, and 
each 
ofthem, from violating Section 17(a) ofthe Securities Act [15 U.S.C. § 77q(a)]; 
III. 
Ordering defendants CR Intrinsic and Martoma to disgorge, on a jomt and several 
basis, with prejudgment interest, all ill-gotten gains received as a result 
ofthe conduct 
alleged in this Complaint, including their ill-gotten gains, and the illicit trading profits, 
other ill-gotten gains, and/or losses avoided 
oftheir direct and downstream tippees; 
IV. 
Ordering defendants. CR Intrinsic, Martoma, and Gilman to pay civil monetary 
penalties pursuant to Section 
21A ofthe Exchange Act [15 U.S.C. §§ 78u(d)(3), 78u-1]; 
v. 
Ordering each ofthe Relief Defendants to disgorge with prejudgment interest on a 
joint and several basis with 
CR Intrinsic all funds unlawfully obtained by which they 
were.unjustly enriched, which 
in the case ofrelief defendant S.A.C. Capital, includes 
joint and several liability for the amounts 
by which S.A.C Capital Associates, LLC, 
S.A.C. International Equities, LLC, and S.A.C. Select Fund, LLC were unjustly enriched; 
and 
24 


VI. 

Granting such other and further relief as this Court may deem just and proper. 

Dated: 
New York, New York 

March 15,2013 

Of Counsel: 
Amelia 
A. Cottrell ([email protected]) 
Charles D. Riely ([email protected]) 
Matthew 
J. Watkins ([email protected]) 
Sanjay Wadhwa 
Senior Associate Director 
Attorney for Plaintiff 
SECURITIES AND EXCHANGE· 
COMMISSION . 
New York Regional Office 
3 World Financial Center, Suite 400 
New York, New York 10281-1022 
(212) 336-0181 
[email protected] 
25 

Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint 

against defendants CR Intrinsic Investors, LLC ("CR Intrinsic"), Mathew Martoma 

("Martoma"), and Dr. Sidney Gilman ("Gilman"), and relief defendants CR Intrinsic 

Investments, LLC, S.A.C. Capital Advisors, LLC ("S.A.C. Capital"), S.A.C. Capital 

Sanjay Wadbwa 
Attorney for Plaintiff 
SECURITIES AND EXCHANGE COMMISSIO 
New York Regional Office 
3 World Financial Center, Suite 400 

-New York, NY 10281-1022 
(212) 336-0181 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 


SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff, 

-against-

CR INTRINSIC INVESTORS, LLC, 
MATHEW MARTOMA, 
and 

DR. SIDNEY GILMAN, 

Defendants, 

and 

CR INTRINSIC INVESTMENTS, LLC, 
S.A.C. CAPITAL ADVISORS, LLC, 
S.A.C. CAPITAL ASSOCIATES, LLC, 
S.A.C. INTERNATIONAL EQUITIES, LLC, 
and 

S.A.C. SELECT FUND, LLC, 

Relief Defendants. 

12 Civ. 8466 (VM) 

ECFCASE 

AMENDED 
COMPLAINT 



Associates, LLC, S.A.C. International Equities, LLC, and S.A.C. Select Fund, LLC 

(collectively, the "Relief Defendants''), alleges as follows: 

SUMMARY 

1. This is an insider trading case where affiliated investment advisers and 

their hedge funds made approximately $275 million in illegal profits or avoided losses in 

July 2008 by trading ahead of a negative public announcement involving the clinical trial 

resUlts for an Alzheimer's drug being jointly developed by Elan Corporation, plc ("Elan") 

and Wyeth. 

2. Martoma, then a portfolio manager at CR Intrinsic, an unregistered 

investment adviser, perpetrated the scheme with Gilman, a professor of neurology at the 

University ofMichigan Medical SchooL Gilman served as the chairman of the Safety 

Monitoring Committee (the "SMC") overseeing the clinical trial, and was selected by 

Elan and Wyeth to present the final clinical trial results at a July 29, 2008 medical 

conference, which was to coincide with the after-market hours public announcement of 

the trial results by the two companies (the "July 29 Announcement"). 

3. Martoma met Gilman through paid consultations that took place between 

2006 and 2008, and were arranged by a New York-based expert network firm. During 

these consultations, Gilman provided Martoma with material nonpublic information 

about the ongoing clinical trial. In addition, starting on or around July 17, 2008, Gilman 

provided Martoma with the actual, detailed results of the clinical trial, in advance ofthe 

July 29 Announcement. 

4. After Martoma received this information, he caused hedge fund portfolios · 

managed by CR Intrinsic as well as hedge fund portfolios managed by S.A.C. Capital not 

2 




only to liquidate their combined long positions in Elan and Wyeth, worth over $700 

million, but also to take substantial short positions, eventually selling over $960 million 

in Elan and Wyeth securities in just over a week. This massive re-positioning allowed 

the CR Intrinsic and S.A.C. Capital hedge funds to collectively reap illicit profits and 

avoid losses ofapproximately $275 million. 

5. These illicit gains resulted from trades placed by or on behalfof the CR 

Intrinsic portfolios controlled by Martoma, and the S.A.C. Capital portfolios controlled 

by that entity's portfolio manager ("Portfolio Manager A"), who collaborated closely 

with Martoma in making the trading decisions. 

6. At the end of2008, Martoma received a $9.3 million bonus, a significant 

portion ofwhich was attributable to the illegal profits that the CR Intrinsic and S.A.C. 

Capital hedge funds had generated in this scheme. 

7. Gilman received over $100,000 from the expert network firm for his 

consultations with Martoma and others at CR Intrinsic and S.A.C. Capital. 

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

8. The Commission brings this action pursuant to the authority conferred 

upon it by Section 20(b) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 

77t(b)] and Section 21(d) ofthe Securities Exchange Act of 1934 ("Exchange Act") [15 

U.S.C. § 78u(d)]. The Commission seeks permanent injunctions against each ofthe 

defendants (other than Gilman as to whom a judgment ordering permanent injunctions 

was entered by the Court on November 21, 2012), enjoining them from engaging in the 

transactions, acts, practices, and courses ofbusiness alleged in this Complaint, and 

disgorgement, on a joint and several basis, of all ill-gotten gains, including profits 

3 




realized and losses avoided from the unlawful insider trading activity set forth in this 

Complaint, together with prejudgment interest (other than Gilman as to whom a judgment 

ordering disgorgement of Gilman's ill-gotten gains, together with prejudgment interest, 

was entered by the Court on November 21, 2012). The Commission also seeks civil 

penalties against each of the defendants pursuant to Section 21A ofthe Exchange Act [15 

U.S.C. § 78u-1]. The Commission seeks any other relief the Court may deem appropriate 

pursuant to Section 21(d)(5) ofthe Exchange Act [15 U.S.C. § 78u(d)(5)]. 

JURISDICTION AND VENUE 

9. This Court has jurisdiction over this action pursuant to Sections 20(b ), 

20(d), and 22(a) ofthe Securities Act [15 U.S.C. §§.77t(b), 77t(d), and 77v(a)] and 

Sections 21(d), 21(e), and 27 ofthe Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 

78aa]. 

10. Venue lies in this Court pursuant to Sections 20(b) and 22( a) ofthe 

Securities Act [15 U.S.C. §§ 77t(b) and 77v(a)], and Sections 21(d), 21A, and 27 ofthe 

Exchange Act [15 U.S.C. §§ 78u(d), 78u-1, and 78aa]. Certain ofthe acts, practices, 

transactions, and courses ofbusiness alleged in this Complaint occurred within the 

Southern District ofNew York. The expert network firm, which arranged telephone calls 

between Martoma and Gilman, and paid Gilman for the consultations, is headquartered in 

New York, New York. An affiliate.ofS.A.C. Capital has an office in New York, New 

York, and Martoma occasionally used this office, including for one meeting with Gilman. 

During the time of the conduct at issue, Wyeth and Elan securities were listed on the New 

York Stock Exchange (the "NYSE"), which is located in New York, New York. 

4 




DEFENDANTS 


11. CR Intrinsic is an unregistered investment adviser located in Stamford, 

Connecticut and an affiliate of S.A.C. Capital. 

12. Martoma, age 38, resides in Boca Raton, Florida. Martoma worked at 

CR Intrinsic between 2006 and 2010, serving as a portfolio manager from at least January 

1, 2008 until his departure from CR Intrinsic in 2010. At all relevant times, Martoma had 

trading authority over certain portfolios at CR Intrinsic. 

13. Gilman, age 80, resides in Ann Arbor, Michigan. Gilman is a medical 

doctor by training, and a professor ofneurology at the University ofMichigan Medical 

School. Gilman served as a consultant to Elan and Wyeth from 2003 until2009, when 

Elan sold its interest in certain drugs to Jannsen/Pfizer. Gilman also moonlighted as a 

consultant for the expert network firm and was paid approximately $1,000 per hour for 

his consultations. 

RELIEF DEFENDANTS 

14. CR Intrinsic Investments, LLC is a hedge fund affiliated with CR 

Intrinsic that benefitted from the illegal insider trades in Elan and Wyeth securities that 

Martoma and CR Intrinsic caused to be executed in July 2008. 

15. S.A.C. Capital is an investment adviser located in Stamford, Connecticut 

that managed certain affiliated hedge funds that benefitted from the illegal insider trades 

in Elan and Wyeth securities Martoma and CR Intrinsic caused to be executed in July 

2008, and obtained increased fees as a result ofthe illicit gains from these trades. 

5 




16. S.A.C. Capital Associates, LLC is a hedge fund that in July 2008 was 

affiliated with S.A.C. Capital and that benefitted from the illegal insider trades in Elan and 

Wyeth securities that Martoma and CR Intrinsic caused to be executed at that time. 

17. S.A.C. International Equities, LLC is a hedge fund that in July 2008 was 

affiliated with S.A.C. Capital and that benefitted from the illegal insider trades in Elan and 

Wyeth securities that Martoma and CR Intrinsic caused to be executed at that time. 

18. S.A.C. Select Fund, LLC is a hedge fund that in July 2008 was affiliated 

with S.A.C. Capital and that benefitted from the illegal insider trades in Elan and Wyeth 

securities that Martoma and CR Intrinsic caused to be executed at that time. 1 

RELEVANT ENTITIES AND INDIVIDUAL 

19. Elan is a biotechnology company incorporated in Ireland, with its 

principal place ofbusiness in Dublin, Ireland. Elan's Ordinary Shares trade on the Irish 

Stock Exchange and the London Stock Exchange and its American Depositary Receipts 

("AD~")- each representing one Ordinary Share- trade on the NYSE under the 

symbol "ELN." Elan has reported as a foreign issuer since at least 1996. 

20. Wyeth was a pharmaceutical company incorporated in Delaware with its 

principal place ofbusiness in Madison, New Jersey. Wyeth's securities were registered 

with the Commission pursuant to Section 12(b) ofthe Exchange Act and its stock traded 

on the NYSE under the symbol "WYE" until Wyeth was acquired by Pfizer in 2009. 

21. Portfolio Manager A is the owner and founder of S.A.C. Capital and CR 

Intrinsic. 

1 CR Intrinsic Investments, LLC, S.A.C. Capital Associates, LLC, S.A.C. International 
Equities, LLC, and S.A.C. Select Fund, LLC are herein collectively referred to as the 
"S.A.C. Capital and CR Intrinsic Funds." · 

6 




FACTS 


Non-Public Clinical Trials for Alzheimer's Drug Conducted by Elan and Wyeth 

22. Before a phannaceutical company can release a new drug, it must conduct 

clinical trials to determine whether the drug is safe and effective in providing treatment to 

patients. Clinical trials generally proceed in three phases. In Phase I, a trial tests the drug 

on a small group ofpeople (generally, 20-80) to determine its safety, determine a safe 

dosage range, and identify side-effects. In Phase II, the drug is given to a larger group of 

people (generally, 200-300) to determine ifit is effective and further evaluate its safety. 

Finally, in Phase III, the drug is given to large groups ofpeople to confirm its 

effectiveness, its safety and to monitor any side-effects. 

23. Between 2006 and 2008, Elan and Wyeth jointly conducted a Phase II 

clinical trial for a potential drug to treat Alzheimer's disease called bapineuzumab 

("bapi") (the "Phase II Trial"). The Phase II Trial was designed to assess the safety and 

tolerability ofbapi in mild-to-moderate Alzheimer's disease, and to explore bapi's 

efficacy at a range of doses. 

24. Elan and Wyeth released top-line results ofthe Phase II Trial on June 17, 

2008 (the "June 17 Announcement"), and released the detailed final results ofthe trial in 

the July 29 Announcement. The market reacted positively to the June 17 Announcement; 

the day after the announcement, the stock prices of Elan and Wyeth rose more than 10% 

and 4%, respectively. However, following the June 17 Announcement, investors were 

immediately looking ahead to the expected release of the detailed results on July 29. As 

one analyst put it, the "[p]resentation ofmore complete data at [a scheduled conference 

on Alzheimer's disease] at the end ofJuly will be a much anticipated event as investors 

7 




should gain much greater insight into the drug's safety and efficacy profile as well as 

whether there may be the possibility for an accelerated registration strategy." 

25. Despite the market's positive reaction to the June 17 Announcement, the 

more detailed July 29 Announcement failed to meet the market's expectations and caused 

the stock price of Elan to plummet approximately 42% and the stock price of Wyeth to 

drop almost 12% by the end ofthe day following the announcement. 

Gilman's Access to Material Nonpublic Information Concerning the Phase II Trial 
and his Duty of Confidentiality 

26. Gilman, who served as a consultant for Elan, had continuing access to 

material nonpublic information concerning the Phase II Trial. First, Gilman served as the 

chairman of the Phase II Trial's SMC, which met regularly between 2006 and 2008 to 

discuss the health ofthe trial participants. In addition, Gilman agreed to present, on 

behalfofElan and Wyeth, the Phase II Trial results at the International Conference on 

Alzheimer's Disease (the "ICAD"), a medical conference that was scheduled to be held 

on July 29, 2008. As a result of agreeing to serve as the presenter at the ICAD, Gilman 

was given access to the full Phase II Trial results approximately two weeks prior to the 

July 29 Announcement. Elan paid Gilman approximately $79,000 for his consultations 

concerning bapi in 2007 and 2008. 

27. By virtue ofhis roles in the clinical trial, and in accordance with the terms 

ofhis contract with Elan, Gilman owed Elan a duty to hold in strict confidence all 

information he learned in connection with his participation in the clinical trial and to use 

such information only for Elan's benefit. The consulting agreement between Elan and 

Gilman provided that "[a]ny and all information which Elan may disclose to Consultant 

under this Agreement will be considered confidential ...." In addition, the SMC 

8 




Operating Guidelines, to which Gilman was subject, provided that "strict confidentiality 

will be maintained by all the SMC members in accordance with written agreement with". 

Elan. 

28. Gilman also received training on the prohibitions of the federal securities 

laws from the expert network firm, which repeatedly reminded Gilman not to share 

nonpublic information with clients. Emails sent to Gilman by the expert network firm 

also listed bapi as a topic that Gilman was ''not allowed to discuss." 

Gilman Provides Martoma Material Nonpublic Information Concerning the 
Phase II Trial 

29. Gilman first met Martoma through paid consultations arranged by the 

expert network finn. Between 2006 and 2009, Gilman 'earned approximately $108,000 

from fifty-nine consultations with portfolio managers and analysts at CR Intrinsic and 

S.A.C. Capital, including forty-two consultations just with Martoma. Over time, Gilman 

developed a personal relationship with Martoma, eventually coming to view Martoma as 

a friend and pupiL 

30. Gilman provided Martoma with material nonpublic information 

concerning the Phase II Trial starting in at least 2007. As a member ofthe SMC, Gilman 

received periodic updates from Elan concerning nonpublic safety data for the ongoing 

trial. For example, in advance of each SMC meeting, Elan sent Gilman a PowerPoint 

presentation that included dosage information, and information concerning side-effects 

that patients in the Phase II Trial were experiencing. 

31. Starting in at least 2007, Gilman would call Martoma after an SMC 

meeting to share with Martoma what he had just learned during the meeting. During 

these calls, Gilman discussed the PowerPoint presentations and provided Martoma with 

9 




his perspective on the results. Gilman's consultations with Martoma frequently occurred 

on the same day or shortly after Gilman had attended the SMC meeting. For example, 

Gilman had consultations with Martoma on February 9, 2007 (the day following an SMC 

meeting), October 9, 2007 (less than three hours after an SMC meeting), and March 18, 

2008 (three hours after an SMC meeting). 

32. Martoma and Gilman coordinated their expert network consultations 

around scheduled SMC meetings. For example, on August 23,2007, Gilman emailed 

Martoma, saying "[t]he SMC teleconference will be postponed until the following week. 

Should we postpone our planned teleconferences until a more definitive date [for the 

SMC teleconference] has been established?" Likewise, when the SMC meeting was not 

rescheduled as expected, Gilman emailed Martoma on September 5, 2007 to report that 

the SMC meeting had still not been scheduled and noted to Martoma, "you may want to 

postpone [our scheduled conference call] until there is more to discuss." Gilman next 

consulted with Martoma through the expert network firm on October 9, 2007- three 

hours after the next SMC meeting. 

33. On at least one occasion prior to July 2008, Gilman emailed Martoma 

concerning specific - and as yet nonpublic - data from the Phase II Trial that Gilman 

had obtained from a PowerPoint presentation from Elan. The email to Martoma, which 

Gilman labeled "For Your Eyes Only" and "High Priority," explicitly referenced the 

dropout rate for the bapi clinical trial and referred to how many patients took bapi during 

each round ofthe trial. The figures used in the email (including certain mathematical 

errors) were taken directly from a slide in the Elan-prepared PowerPoint presentation 

used at the March 18, 2008 SMC meeting. 

10 




34. Martoma and Gilman also took steps to conceal the true topic oftheir 

conversations from the expert network firm. For example, when Martoma scheduled a 

consultation with Gilman three hours after the March 18, 2008 SMC meeting, Martoma 

reported to the expert network firm that the purpose of the call was "Follow-up with Dr. 

Gilman: AAN Abstract Preview" even though Martoma and Gilman had discussed the 

Phase II Trial during the consultation. Later, in advance of a consultation that Gilman's 

personal calendar noted was to discuss side-effects that the Phase II Trial was finding in 

patients taking bapi, Gilman emailed Martoma and asked him to set up a consultation 

with the expert network firm, suggesting that Martoma tell the expert network firm that 

the consultation was to discuss a drug to treat Parkinson's disease. 

The CR Intrinsic and S.A.C. Capital Portfolios Establish Long Positions in Elan and 
Wyeth Prior to July 2008 

35. Throughout 2007 and up to July 2008, the CR Intrinsic and S.A.C. Capital 

portfolios established substantial long positions in Elan and Wyeth securities. As of June 

30,2008, the CR Intrinsic portfolios owned over $233 million worth of Elan securities 

and over $80 million ofWyeth stock. The combined holdings in Elan and Wyeth 

securities represented approximately 14% of the CR Intrinsic portfolios' entire equity 

position at that time. Similarly, as of June 30, 2008, the S.A.C. Capital portfolios owned 

over $293 million of Wyeth stock and over $95 million of Elan securities, which 

represented over 4% ofthe S.A.C. Capital portfolios' entire equity position at that time. 

11 




Finally, in addition, the S.A.C. Capital portfolios also held an equity swap position with 

respect to 12 million shares of Wyeth stock. 2 

36. CR Intrinsic's and S.A.C. Capital's Elan and Wyeth positions were held 

primarily in portfolios controlled by Martoma and Portfolio Manager A, respectively. 

Martoma included Elan and Wyeth as "long ideas" in his weekly portfolio updates 

circulated between January 1, 2008 and early July 2008 to Portfolio Manager A, among 

others, and listed the release ofthe Phase II Trial results as an "[u]pcoming catalyst." 

Portfolio Manager A invested in Elan and Wyeth securities based in part on the advice of 

Martoma. 

37. Martoma and Portfolio Manager A maintained their bullish positions in 

Elan and Wyeth even though there was significant dissent within CR Intrinsic and S.A.C. 

Capital on the wisdom ofa large unhedged investment in Elan and Wyeth securities. In 

March and April of2008, two analysts at CR Intrinsic repeatedly sent emails to Portfolio 

Manager A advocating against the Elan and Wyeth positions and suggesting trading 

strategies designed to hedge them. 

38. For example, on March 26,2008, one ofthese analysts sent Portfolio 

Manager A an email with the subject line "ELN, (important, please read) negative reads 

from company and other buysiders" and listed several reasons why the analyst was 

concerned with the Elan position. Portfolio Manager A forwarded the email to Martoma, 

who responded, "I read the message. Nothing worrisome here. Let me know when you 

2 An equity swap is a transaction, typically entered into with a broker-dealer, where a 
party receives cash flow based on the performance ofthe underlying equity for a 
specified period of time in exchange for paying a premium to the broker-dealer. 
Generally, a party will sell its equity position and buy the economic interest on the shares 
it sold via an equity swap when it desires to free up cash. 

12 




are free to discuss in detaiL" Martoma and Portfolio Manager A made no changes to 

their holdings despite the analysts' concerns. In fact, after the Jtme 17 Annotmcement, 

Portfolio Manager A indicated he would no longer consider any investment ideas in Elan 

or Wyeth from these two CR Intrinsic analysts. 

Gilman's July 2008 Communications with Martoma Concerning the Trial Results 

39. Martoma maintained his bullish view ofElan after the June 17 

Annotmcement. In fact, in a June 30, 2008 email (sent when Elan securities were trading 

at approximately $35 per share), Martoma told Portfolio Manager A that he intended to 

add further to the Elan position, saying, "I think stock breaks $40 ..." following the July 

29 Announcement. 

40. In late June, Gilman learned that he likely would be selected to present the 

Phase II Trial results at the ICAD on July 29. After finding out about his selection, 

Gilman sent an email to Martoma with the subject line "Some news" and told Martoma to 

"[p]lease set up [an expert network finn] conversation re MS." During this consultation 

-purportedly about MS -Gilman informed Martoma that he would be the presenter 

ofthe final clinical trial results at the ICAD on July 29. After being named the presenter, 

Gilman arranged to travel to Elan's offices on July 15 and 16,2008, so that he could 

learn the full results ofthe Phase II Trial. 

41. Thereafter, in the weeks leading up to the July 29 Announcement, Gilman 

had several telephone calls with Martoma during which he provided Martoma with 

material nonpublic information regarding not only the safety results, but also the efficacy 

results for the Phase II Trial. For example, on Friday, July 11,2008, Gilman participated 

in an SMC meeting in which the safety results for the completed Phase II Trial as a whole 

13 




were discussed. Two days later, on Sunday, July 13, Gilman spoke with Martoma for 

more than 1 hour and 40 minutes. During this call, Gilman provided confidenti;li 

information to Martoma concerning the completed Phase II Trial safety results. Gilman, 

in fact, explicitly noted in his electronic calendar that the purpose of this call with 

Martoma was to discuss "SAEs in hap" -referring to serious adverse effects, also 

known as side-effects, found in patients taking bapi. 

42. Towards the end ofthe July 13 call, Martoma and Gilman each created 

Outlook Calendar entries reflecting that they intended to speak again on July 17, 2008 ­

the day after Gilman returned from his scheduled meetings with Elan. 

43. On July 15,2008, Gilman traveled to San Francisco in a private plane 

arranged by Elan to participate in two days ofmeetings concerning the Phase II Trial 

efficacy results. During these meetings, Gilman was briefed on the complete efficacy 

results ofthe trial, and also reviewed and commented upon a PowerPoint presentation 

that he would use to present the results at the ICAD. 

44. On July 17, 2008, after Gilman returned to Ann Arbor, an Elan officer sent 

Gilman an updated ICAD Power Point presentation in an email labeled "Confidential, Do 

Not Distribute." The twenty-four page PowerPoint included summaries ofthe detailed 

efficacy results and safety results for the Phase II Trial as well as additional commentary 

on how Elan and Wyeth were interpreting the data. 

45. Later in the afternoon of July 17, 2008, Gilman and Martoma had another 

lengthy phone call during which Gilman provided Martoma with confidential information 

regarding the detailed results ofthe Phase II Trial, including all the information contained 

in the Power Point presentation. At or about 3:00 pm on July 17, 2008, Martoma was 

14 




picked up at S.A.C. Capital's New York office for a one-way trip to his home in 

Greenwich, Connecticut. At 4:15 pm, Martoma called Gilman from his home phone and 

talked to Gilman for approximately 1 hour and 45 minutes. 

46. Shortly after this call, Gilman sent the PowerPoint presentation to 

Martoma Martoma subsequently called Gilman to request the password needed to open 

the encrypted file, which Gilman provided. 

4 7. Gilman and Martoma continued to communicate after their July 17 

conversation in the days leading up to the July 29 Announcement. In addition to three 

short calls on July 18, Martoma and Gilman had a 39-minute conversation on July 22, a 

23-minute conversation on July 24, and an approximately 11-minute conversation the day 

before the July 29 Announcement. 

Martoma, CR Intrinsic, and S.A.C. Capital Trade Elan and Wyeth Securities Based 
on the Material Nonpublic Information from Gilman 

48. On the morning of Sunday, July 20, 2008, following his July 17 and 18 

calls with Gilman, Martoma sought to speak with Portfolio Manager A about the Elan 

positions that the CR Intrinsic and S.A.C. Capital portfolios had amassed to that point, 

telling Portfolio Manager A by email that "[i]t's important" that they speak. Martoma 

and Portfolio Manager A thereafter spoke for nearly 20 minutes. Martoma indicated to 

Portfolio Manager A that Martoma was no longer "comfortable" with the. Elan 

investments held by the CR Intrinsic and S.A.C. Capital portfolios. 

49. On Monday, July 21, 2008, Portfolio Manager A's head trader at S.A.C. 

Capital (the "Head Trader") began selling Elan and Wyeth securities held in the CR 

Intrinsic and S.A.C. Capital portfolios that Martoma and Portfolio Manager A controlled. 

Before the market opened on July 21, 2008, these portfolios held over 10.5 million Elan 

15 




securities worth over $365 million and over 7.1 million Wyeth shares worth over $335 

million, for a total position size of over $700 million. 

50. At Portfolio Manager A's direction, the trades that the Head Trader. 

executed in Elan and Wyeth securities between July 21 and July 29,2008 were kept 

confidential even within CR Intrinsic and S.A.C. Capital. For example, on July 21, 2008, 

the Head Trader emailed Martoma concerning the sales: "obviously no one knows except 

me[,] you and [Portfolio Manager A]." Later, after the Head Trader sold CR Intrinsic's 

and S.A.C. Capital's portfolios' existing position in Elan, the Head Trader reported to 

Portfolio Manager A that "[w]e executed a sale ofover 10.5 million ELN for [various 

portfolios at CR Intrinsic and S.A.C. Capital] at an avg price of34.21. This was executed 

quietly and efficiently over a 4 day period through algos and darkpools and booked into 

two firm accounts that have very limited viewing access." 

51. Martoma also urged Portfolio Manager A and the Head Trader to sell the 

Elan securities in the CR Intrinsic and S.A.C. Capital portfolios quickly. For example, on 

July 22, ten minutes after the Head Trader called Martoma, Martoma sent Portfolio 

Manager A an instant message at 1:22:34 p.m. saying, "would do more today if 

possible[,]" suggesting that Portfolio Manager A sell more Elan ADRs. At 1 :22:50 p.m., 

Portfolio Manager A responded, in relevant part, "we are done on 2.3 today[.]" Martoma 

replied, "my sense is today-thurs are best days so ifpossible to do more, would do so[.]" 

After receiving Martoma's message, Portfolio Manager A sold over an additiona12.2 

million Elan ADRs on July 22. 

52. In total, between July 21, 2008 and July 29, 2008 (the last trading day 

before the post-market July 29 Announcement), the CR Intrinsic and S.A.C. Capital 

16 




portfolios sold over 15 million Elan securities for gross proceeds of over $500 million. 

Although the investment advisers' portfolios achieved a zero balance in Elan securities 

by July 25, 2008, they continued to sell short Elan securities until the July 29 

Announcement.3 By the close ofthe market on July 29,2008, the CR Intrinsic and 

S.A.C. Capital portfolios had a combined short position of approximately 4.5 million 

Elan securities. The trading by the CR Intrinsic and S.A.C. Capital portfolios in Elan 

securities constituted over 20% of the reported trading volume in the seven days prior to 

the July 29 Announcement. 

53. In addition, between July 21, 2008 and July 29, 2008, the CR Intrinsic and 

S.A.C. Capital portfolios sold over 10.4 million shares ofWyeth for gross proceeds of 

over $460 million, including over 6.1 million Wyeth shares worth over $270 million 

during the very day ofthe July 29 Announcement. As a result ofthese sales, the CR 

Intrinsic and S.A.C. Capital portfolios had a zero balance in Wyeth stock during the 

trading day on July 29,2008, but continued to place short sales that day. By the close of 

the marketon July 29, 2008, the CR Intrinsic and S.A.C. Capital portfolios had a 

combined short position ofapproximately 3.3 million Wyeth shares. The trading by the 

CR Intrinsic and S.A.C. Capital portfolios in Wyeth securities constituted over 11% of 

the reported trading volume in the seven days prior to the July 29 Announcement. 

. 54. The chart belowsummarizes CR Intrinsic's and S.A.C. Capital's 

portfolios' combined equity positions in Elan and Wyeth before the markets opened on 

3 To "sell short" is to sell a security that one does not own, but rather has arranged to 
borrow from a third party, with the intention ofpurchasing (also called "covering") the 
security at a later date to deliver to the lender. A short seller stands to gain ifthe price of 
the security declines between the short sale and the purchase because the short seller has 
sold the security at a price that is greater than the purchase price. 

17 




July 21,2008, and the trading with respect to those securities prior to the July 29 

Announcement: 

Description Elan ADRs Wyeth Stock 

Equity Positions Before Trading 
Opened On July 21,2008 

> 10.5 million shares >7.1 million shares 

Value ofEquity Positions >$365 million >$335 million 

Sales (Long and Short) between 
July 21 and July 29 

>15 million shares >10.4 million shares 

Total Sales Proceeds >$500 million >$460 million 

Short Position Held Prior to July 
29 Announcement 

4.5 million shares 3.3 million shares 

Percentage of Marketwide Sales 
Volume 

>20% >11% 

55. CR Intrinsic and S.A.C. Capital also placed options trades in Elan ADRs 

that bet on the ADR share price going down. For example, on July 28 and July 29, the 

CR Intrinsic and S;A.C. Capital portfolios purchased over $1 million worth ofElan put 

options with strike prices below the Elan ADR share price on those trading days. 4 

Elan and Wyeth Issue a Negative Announcement Concerning the Phase II Trial 

. 56. On July 29, 2008, after the close ofU.S. securities markets, Gilman 

presented the results ofthe Phase II Trial at the ICAD, and Elan and Wyeth issued a press 

release summarizing the results. Although Elan and Wyeth emphasized the positive 

aspects ofthe trial, the press release and Gilman's presentation included additional details 

4 A put option is a financial contract between two parties that gives the buyer the right, 
but not the obligation, to sell an agreed quantity of stock during a specified time period at 
a specified price. A buyer of a put option pays a premium to purchase this right, and 
generally stands to gain if the price of the stock decreases. 

18 




not included in the June 17 Announcement, and the market reacted negatively to the full 

results. 

57. On July 30, 2008, the first trading day after the July 29 Announcement, 

Elan's share price fell from $33.75 (the closing price on the day of the announcement) to 

$19.63 (the closing price on the day after the announcement), a decline of approximately 

42%. Wyeth's stock price fell from $45.11 (the closing price on the day of the 

announcement) to $39.7 4 (the closing price the day after the announcement), a decrease 

of approximately 12%. 

Profits Reaped and Losses Avoided by CR Intrinsic and S.A.C. Capital 

58. As a result ofthe trades that were entered into during the period between 

Martoma's conversation with Gilman on July 17, 2008 and the July 29 Announcement, 

CR Intrinsic and S.A.C. Capital portfolios in which Martoma and Portfolio Manager A 

had trading authority reaped profits and avoided losses ofapproximately $275 million as 

follows (figures are approximate): 

Description £/au Wretfl 

Profits from Short Sales $59.2 million $16 million 

Profits from Option Trades $5.1 million N/A 

Losses A voided $154.2 million $40.4 million 

Total Illicit Gain $218.5 million $56.4 million 

59. Following certain allocations made after the July 29 Announcement, the 

· profits and avoided losses were distributed roughly evenly between the CR Intrinsic 

portfolios, which reaped profits and avoided losses of approximately $138 million, and 

19 




the S.A.C. Capital portfolios, which reaped profits and avoided losses of approximately 

$137 million. 

Martoma's Reward for His Profitable Trades and His Departure From CR Intrinsic 

60. At the end of2008, Martoma received a bonus of over $9.3 million that 

included a percentage of the Elan trading profits in the CR Intrinsic portfolios, as well as 

a share ofthe Elan profits in certain S.A.C. Capital portfolios. 

61. In contrast to 2008, which had been a banner year for him, Martoma was 

unable to generate such winning trades or outsized returns in 2009 and 2010, and did not 

receive a bonus in either of those years. In a 2010 email suggesting that Martoma's 

_employment be terminated, a S.A.C. Capital officer stated that Martoma had been a "one 

trick pony with Elan." 

CLAIMS FOR RELIEF 


CLAIM I 

Violations of Section lO(b) ofthe Exchange Act and Rule lOb-S Thereunder 


(Against Defendants CR Intrilisic, Martoma, and Gilman) 


62. The Commission realleges and incorporates by reference paragraphs 1 

through 61, as though fully set forth herein. 

63. The information provided by Gilman to Martoma concerning the Phase II 

Trial was, in each case, material and nonpublic. In addition, the information was, in each 

case, considered confidential by Elan and the SMC for the Phase II Trial, which were the 

sources ofthe information, and Elan and the SMC had policies protecting confidential 

information. 

2064. Gilman provided the material nonpublic information to Martoma in breach 

of the fiduciary duty that Gilman owed to Elan and the SMC, and did so with the 

expectation of receiving a benefit. 

65. Martoma knew, recklessly disregarded, or should have known, that 

Gilman owed a fiduciary duty, or obligation arising from a similar relationship of trust 

and confidence, to keep the information confidential. 

66. Martoma and CR Intrinsic each caused the .S.A.C. Capital and CR Intrinsic 

Funds to trade based on material nonpublic information concerning the Phase II Trial, 

with the expectation of a benefit from doing so, and each knew, recklessly disregarded, or 

should have known, that the information was conveyed in breach of a fiduciary duty, or 

obligation arising from a similar relationship of trust and confidence .. 

67. Martoma and CR Intrinsic each knew, recklessly disregarded, or should 

have known, that the material nonpublic information concerning the Phase II Trial that 

each received from their respective tippers was disclosed or misappropriated in breach of 

a fiduciary duty, or similar relationship of trust and confidence. 

68. CR Intrinsic, Martoma, and Gilman are jointly and severally liable for the 

trading ofthe S.A.C. Capital and CR Intrinsic Funds because they each directly or 

indirectly effectuated the trades on behalf ofthe funds and/or unlawfully disclosed the 

material nonpublic information to the funds. 

69. By virtue ofthe foregoing, defendants CR Intrinsic, Martoma, and 

Gilman, and each of them, in connection with the purchase or sale of securities, by the 

use ofthe means ·or instrumentalities of interstate commerce, or ofthe mails, or a facility 

of a national securities exchange, directly or indirectly: (a) employed devices, schemes 

21 




or artifices to defraud; (b) made untrue statements ofmaterial fact or omitted to state 

material facts necessary in order to make the statements made, in the light ofthe 

circumstances under which they were made, not misleading; or (c) engaged in acts, 

practices or courses ofbusiness which operated or would have operated as a fraud or 

deceit upon persons. 

70. By virtue oftQ.e foregoing, defendants CR Intrinsic, Martoma, and 

Gilman, and each of them, directly or indirectly, violated, and unless enjoined, will again 

violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule lOb-5 

thereunder [17 C.F.R. § 240.10b-5]. 

CLAIM II 

Violations of Section 17(a) ofthe Securities Act 


(Against Defendants CR Intrinsic, Martoma, and Gilman) 


71. The Commission realleges and incorporates by reference paragraphs 1 

through 70, as though fully set forth herein. 

72. By virtue of the foregoing, in the offer or sale of securities, by the use of 

means or instruments of transportation or communication in interstate commerce or by 

the use ofthe mails, directly or indirectly, defendants CR Intrinsic, Martoma, and 

Gilman, and each ofthem: (a) employed devices, schemes or artifices to defraud; (b) 

obtained money or property by means of an untrue statement of a material fact or omitted 

to state a material fact necessary in order to make the statements. made, in light of the 

circumstances under which they were made, not misleading; and (c) engaged in 

transactions, practices or courses ofbusiness which operate or would operate as a fraud 

or deceit upon a purchaser. 

22 




73. By reason of the conduct described above, each of the defendants directly 

or indirectly violated, and unless enjoined will again violate, Section 17(a) of the 

Securities Act [15 U.S.C. § 77q(a)]. 

CLAIM III 

Unjust Enrichment 


(Against Relief Defendants) 


74. The Commission realleges and incorporates by reference paragraphs 1 

through 73, as though fully set forth herein. 

75. Each ofthe S.A.C. Capital and CR Intrinsic Funds earned profits or 

avoided losses as a result ofthe violations by CR Intrinsic, Martoma, and Gilman, as 

alleged above, under circumstances in which it is not just, equitable or conscionable for 

the S.A.C. Capital and CR Intrinsic Funds to retain the funds. As a result ofthe 

foregoing, the S.A.C. Capital and CR Intrinsic Funds were unjustly enriched. 

76. S.A.C. Capital earned increased fees as a result of the violations by CR 

Intrinsic, Martoma, and Gilman, as alleged above, under circumstances in which it is not 

just, equitable or conscionable for S.A.C. Capital to retain the funds. As a result ofthe 

foregoing, S.A.C. Capital was unjustly enriched. 

RELIEF SOUGHT 

WHEREFORE, the Commission respectfully requests that this Court enter a 

Final Judgment: 

I. 

Permanently restraining and enjoining defendants CR Intrinsic and Martoma, and 

each ofthem, from violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and 

Rule lOb-5 thereunder [17 C.F.R. § 240.10b-5]; 

23 




II. 

Permanently restraining and enjoining defendants CR Intrinsic and Martoma, and 

each ofthem, from violating Section 17(a) ofthe Securities Act [15 U.S.C. § 77q(a)]; 

III. 

Ordering defendants CR Intrinsic and Martoma to disgorge, on a jomt and several 

basis, with prejudgment interest, all ill-gotten gains received as a result of the conduct 

alleged in this Complaint, including their ill-gotten gains, and the illicit trading profits, 

other ill-gotten gains, and/or losses avoided of their direct and downstream tippees; 

IV. 

Ordering defendants. CR Intrinsic, Martoma, and Gilman to pay civil monetary 

penalties pursuant to Section 21A of the Exchange Act [15 U.S.C. §§ 78u(d)(3), 78u-1]; 

v. 

Ordering each of the Relief Defendants to disgorge with prejudgment interest on a 

joint and several basis with CR Intrinsic all funds unlawfully obtained by which they 

were.unjustly enriched, which in the case ofrelief defendant S.A.C. Capital, includes 

joint and several liability for the amounts by which S.A.C Capital Associates, LLC, 

S.A.C. International Equities, LLC, and S.A.C. Select Fund, LLC were unjustly enriched; 

and 

24 




VI. 


Granting such other and further relief as this Court may deem just and proper. 


Dated: New York, New York 

March 15,2013 


Of Counsel: 

Amelia A. Cottrell ([email protected]) 
Charles D. Riely ([email protected]) 
Matthew J. Watkins ([email protected]) 

Sanjay Wadhwa 
Senior Associate Director 
Attorney for Plaintiff 
SECURITIES AND EXCHANGE· 
COMMISSION . 
New York Regional Office 
3 World Financial Center, Suite 400 
New York, New York 10281-1022 
(212) 336-0181 
[email protected] 

25 


mailto:[email protected]
mailto:[email protected]
mailto:[email protected]
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