Former SAC fund manager charged over insider trading

NEW YORK (Reuters) - A former hedge fund manager who worked for a fund affiliated with SAC Capital was arrested on Tuesday in what U.S. prosecutors say could be the most lucrative insider trading scheme ever charged.

Mathew Martoma, who worked for CR Intrinsic Investors, a unit of SAC Capital, has been accused of making more than $250 million in illicit profits based on tips about Elan Corp and Wyeth, which was bought by Pfizer in late 2009.

Martoma's lawyer was not immediately available for comment.

According to court papers filed on Tuesday, Martoma spoke in July 2008 to the "hedge fund owner" and recommended selling shares of Elan and Wyeth before drug trial results were announced.

The court filings do not identify the hedge fund owner, but CR Intrinsic is part of SAC Capital, which is a $14 billion hedge fund controlled by Steven A. Cohen, one of the industry's best-known and most successful traders.

A spokesman for SAC Capital declined to comment.

The court papers do not indicate that Cohen had any knowledge of how Martoma obtained the information, which authorities say came from a doctor, who is serving as a confidential cooperating witness in the case.

The charges against Martoma are the latest in a string of insider trading allegations to be leveled against former top traders and analysts who worked at the Stamford, Connecticut-based SAC Capital.

Martoma was arrested on Tuesday morning in Boca Raton, Florida, according to a spokesman for the Federal Bureau of Investigations.

(Editing by Matthew Goldstein and Andrew Hay)