Pfizer Challenges Court Ruling on $75 Million Claim

Pfizer has filed an appeal with the 2nd U.S. Circuit Court of Appeals in Manhattan after a federal judge ruled against its claim for $75.2 million from a decade-old insider trading settlement. The appeal, filed on Tuesday, contests a November decision that deemed Pfizer ineligible for leftover funds from SAC Capital Management’s $602 million settlement with the U.S. Securities and Exchange Commission (SEC).

The Insider Trading Case

The $602 million settlement was reached in March 2013 between the SEC and SAC Capital Management, then owned by billionaire Steven A. Cohen. The case stemmed from insider trading involving trades in drugmakers Wyeth and Elan by Mathew Martoma, a former SAC employee. Martoma had been convicted for using confidential information about a 2008 Alzheimer’s drug trial.

Pfizer acquired Wyeth in 2009 and claims that the neurologist who tipped Martoma owed a fiduciary duty to Wyeth due to his consulting role with the company.

Judge’s Ruling Against Pfizer

In November, U.S. District Judge Victor Marrero in Manhattan rejected Pfizer’s claim, ruling that Wyeth was not a victim of Martoma’s trading activities. The ruling stated that only Wyeth and Elan investors who lost money were eligible for compensation, leaving Pfizer out of the equation.

Pfizer’s Appeal

Pfizer’s appeal to the 2nd Circuit seeks to overturn Judge Marrero’s decision. The drugmaker maintains that it is entitled to the $75.2 million, arguing that the neurologist’s fiduciary duty to Wyeth makes the company a rightful beneficiary of the settlement.

The appeals process is expected to take several months or longer.

Steven Cohen’s Role and Current Status

Steven A. Cohen, the billionaire founder of SAC Capital, was not criminally charged in the insider trading case. In 2014, he rebranded his hedge fund as Point72 Asset Management. Forbes estimates Cohen’s current net worth at $21.3 billion.