Pfizer's $75.2 Million Claim Dismissed; Billionaire Cohen Escapes Consequences

In Tuesday's ruling, A federal judge has rejected Pfizer's request for about $75.2 million in claims against the Securities and Exchange Commission in its insider-trading settlement with SAC Capital Management, the billionaire Steven A. Cohen's former hedge fund. U.S. District Judge Victor Marrero in Manhattan ruled that drugmaker Wyeth, which Pfizer acquired in 2009, did not qualify as a victim of related securities violations in the SEC case and was therefore not entitled to the funds.

Judge Marrero directed that the funds be paid to the U.S. Treasury, as requested by the SEC.

Pfizer and its legal advisers were not immediately available for comment.

The dispute stems from a $602 million civil settlement related to dealings with Wyeth Pharmaceuticals and Elan Pharmaceuticals by Mathew Martoma, who worked at an SAC unit before being convicted of a neurologist's tips about a 2008 Alzheimer's drug trial.

SAC pleaded guilty to fraud in 2013 and paid a $1.8 billion settlement to the SEC and other regulators.

After compensating Wyeth and Elan investors for their losses, the SEC has $75.2 million remaining. Pfizer claims it should receive the money because neurologist Sidney Gilman, who had been a consultant to Wyeth, breached his fiduciary duty to the company. However, the judge noted that the reputational damage Wyeth suffered as a result of the scandal did not equate to a financial loss.

"The court certainly recognizes that companies where confidential information is used for insider trading purposes are generally victims of wrongdoing," he wrote in the ruling. "But Pfizer has failed to demonstrate how the insider trading scheme and the subsequent reputational damage to Wyeth would constitute economic harm in the context of the distribution of the forfeited funds."

Judge Marrero added that the $7 billion loss in Wyeth's market value after the drug trial had nothing to do with the insider trading scheme that came to light three years later.

Cohen was not criminally charged, but accepted a two-year ban from managing outside money to end an SEC investigation into his oversight of Martoma.

In 2014, he changed the name of SAC Capital to Point72 Asset Management and stopped trading in the fund in September. According to Forbes magazine, Cohen is worth $21.3 billion.

The case is SEC v. CR Intrinsic Investors LLC et al, U.S. District Court, Southern District of New York, No. 12-08466.