By Nate Raymond
NEW YORK (Reuters) - Mathew Martoma, a former SAC Capital Advisors portfolio manager convicted of insider trading, should be sentenced to a "substantial" term of prison beyond the eight years recommended by probation officers, U.S. prosecutors argued Friday.
In court papers filed in New York federal court, prosecutors urged U.S. District Judge Paul Gardephe to impose a prison term for Martoma "toward the high end" of sentences imposed in insider trading cases.
"If the crime of insider trading is a serious one, Martoma stands before the court as one of the very worst offenders," prosecutors wrote.
The court's probation department has recommended Martoma be sentenced to eight years in prison. It had calculated that under the federal sentencing guidelines, Martoma would face between 15 years, 8 months and 19 years, 7 months in prison.
Martoma's lawyers had called those lengths of time "outrageous" and "irrational." Prosecutors on Friday said they also did not oppose a sentence below that range.
But prosecutors under Manhattan U.S. Attorney Preet Bharara told Gardephe he should impose a "substantial" sentence in light of the seriousness of the conduct and the "unprecedented" ill-gotten gains.
Richard Strassberg, a lawyer for Martoma, declined comment.
Martoma, 40, faces sentencing on July 28 after a jury found him guilty in February on conspiracy and securities fraud charges for trading on confidential tips about a clinical trial for an Alzheimer's drug.
Prosecutors said the scheme enabled SAC to make $275 million (161.44 million pounds) in July 2008 from trades in Elan Corp and Wyeth, a record amount in U.S. insider trading cases.
Elan was acquired last year by Perrigo Company Plc (N:PRGO), while Wyeth is now owned by Pfizer Inc (N:PFE).
Martoma is one of eight SAC employees to have been convicted on insider trading charges. SAC, founded by billionaire Steven A. Cohen, pleaded guilty to fraud and agreed to pay $1.8 billion in criminal and civil settlements.
Cohen, 58, has not been criminally charged. He has renamed his Stamford, Connecticut-based firm Point72 Asset Management, and shifted its focus to managing his fortune.
On Friday, SAC Capital reached an agreement with the U.S. Securities and Exchange Commission to no longer be an investment adviser, following the firm's guilty plea.
Cohen continues to face a SEC administrative action for failing to supervise SAC employees who engaged in insider trading, including Martoma. He denies wrongdoing.
The longest U.S. insider trading sentence is a 12-year term given to lawyer Matthew Kluger for a $37 million scheme for which he pleaded guilty in 2011.
The case is U.S. v. Martoma, U.S. District Court for the Southern District of New York, 12-cr-00973.
(Reporting by Nate Raymond in New York; Editing by Bernard Orr)