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Ex-SAC fund manager pleads not guilty in insider case

By Bernard Vaughan

NEW YORK (Reuters) - Mathew Martoma, a former portfolio manager at hedge fund SAC Capital Management, pleaded not guilty to fraud charges stemming from a $276 million insider-trading case brought by federal prosecutors.

"I plead not guilty, your honor," said Martoma, speaking in a calm voice, to each of three counts that U.S. District Judge Paul Gardephe in Manhattan read to him on Thursday.

Martoma was indicted last month on charges of conspiracy to commit securities fraud and securities fraud.

He is accused of helping CR Intrinsic Investors, one of the funds run by investment manager Steven A. Cohen's SAC Capital, make illegal trades in Elan Corp Plc and Wyeth, now part of Pfizer Inc . The trades were made in the summer of 2008 based on illicit tips prosecutors say Martoma received from a doctor, according to the indictment.

The case is the latest in the U.S. government's wide-ranging investigation of suspicious trading among hedge fund traders, portfolio managers and consultants. The probes have produced more than 50 convictions, with many of the defendants pleading guilty instead of going to trial.

When asked after the hearing if he was negotiating a plea agreement with prosecutors, Martoma's lawyer, Charles Stillman, said "the answer is no."

"Mathew Martoma is an innocent man," Stillman said.

At the hearing, Assistant U.S. Attorney Arlo Devlin-Brown said evidence in the case will include trading records, phone records and e-mails regarding the trades, and will include "voluminous discovery" from the hedge fund in the case.

Martoma is the seventh former employee of Cohen's to be charged or implicated in an insider-trading case while working at SAC Capital. Some former SAC Capital employees have been charged with insider trading after leaving the firm and while working at other funds.

Cohen has not been charged with wrongdoing.

The criminal complaint against Martoma is the first to refer to Cohen, who appears in it as "Hedge Fund Owner" and "hedge fund manager A," in a corresponding civil complaint the U.S. Securities and Exchange Commission filed against him, a source previously told Reuters.

The next court hearing in Martoma's case was set for March 5.

(Reporting By Bernard Vaughan; Editing by Martha Graybow and Tim Dobbyn)

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