The Corruption of Sid Gilman

continued

The windfall made Martoma a star--briefly. He got a $9.38 million bonus in January 2009. But after failing to come up with any comparable revelations about other companies, Martoma was fired in 2010. With his earnings, he retired to a home in Florida with his wife and three young children.

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If convicted of insider trading, Gilman could have faced fifteen to nineteen years in prison, based on federal sentencing guidelines.

Gilman hired attorney Michael Mukasey, the son of a U.S. attorney general and a high-powered corporate defender. Mukasey eventually got Gilman a "very good deal," says Henning--though it includes an admission of guilt, he's not subject to any criminal penalties.

Henning believes that the feds must have approached Gilman--and persuaded him to "flip" and squeal on his Wall Street pal--sometime before late 2011. That was when, according to the Wall Street Journal, federal agents showed up at Martoma's home.

Warning him he faced prison time, they offered leniency if he too would flip and cooperate in their investigation of his former boss, SAC's Cohen. Pressed, Martoma fainted on the spot. When he came to, he refused to cooperate. Martoma has pleaded not guilty; Cohen and SAC deny wrongdoing and have not been charged with any crime.