By Emily Flitter and Basil Katz
NEW YORK | Tue Nov 20, 2012 2:05pm EST
(Reuters) - A former hedge fund manager who worked for a fund affiliated with Steven A. Cohen's SAC Capital was arrested on Tuesday in what U.S. prosecutors are calling "the most lucrative insider-trading scheme ever."
Mathew Martoma, who worked for CR Intrinsic Investors in Stamford, a unit of SAC Capital, has been accused of making more than $276 million in illicit profits based on tips about Elan Corp and Wyeth LLC, which was bought by Pfizer in late 2009.
Authorities contend Martoma and SAC Capital's CR Intrinsic made more than $276 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 and Wyeth.
The charges against Martoma, who left the SAC Capital division in 2010, stem from the federal government's long-running investigation into improper trading in the $2 trillion hedge fund industry.