<span id="midArticle_start"/> (Adds details from decision, case citations, byline)
<span id="midArticle_0"/>By Jonathan Stempel
<span id="midArticle_1"/> (Reuters) - A federal judge dismissed claims by former Elan Corp and Wyeth shareholders accusing billionaire investor Steven A. Cohen's SAC Capital Advisors LP of violating federal racketeering law by conducting insider trading in the drugmakers' stocks.
<span id="midArticle_2"/>In a decision made public on Tuesday, U.S. District Judge Victor Marrero in Manhattan said the civil claims brought under the Racketeer Influenced and Corrupt Organizations Act could not be pursued on the basis of SAC's having pleaded guilty in 2013 to related criminal charges.
<span id="midArticle_3"/>The claims had been added in September to a still-pending fraud lawsuit against SAC, its CR Intrinsic affiliate, Cohen, convicted former CR Intrinsic portfolio manager Mathew Martoma, and former University of Michigan professor Sidney Gilman.
<span id="midArticle_4"/>Investors claimed to have suffered damages by trading in Elan and Wyeth while Martoma was generating $275 million of illegal gains for SAC by trading on Gilman's secret tips about an Alzheimer's drug trial, before results were released on July 29, 2008.
<span id="midArticle_5"/>Now known as Point72 Asset Management, SAC pleaded guilty to fraud and paid $1.8 billion in criminal and civil settlements with U.S. authorities.
<span id="midArticle_6"/>But Marrero said SAC did not plead guilty to insider trading in Elan and Wyeth, and thus the investors could not claim they were defrauded under RICO "in connection with" that trading.
<span id="midArticle_7"/>The judge also said it would be unfair to hold defendants such as SAC and CR Intrinsic civilly liable.
<span id="midArticle_8"/>"To hold otherwise would mean, in essence, a defendant charged with multiple securities fraud violations cannot plead to only some of those frauds without opening the door to civil RICO claims on all of the alleged frauds," Marrero wrote. That would not be a "sensible interpretation" of the law, he added.
<span id="midArticle_9"/>Ethan Wohl, a lawyer for the investors, did not immediately respond on Tuesday to requests for comment.
<span id="midArticle_10"/>A Point72 spokesman said the firm was pleased with the decision, which is dated April 27.
<span id="midArticle_11"/>Elan is now part of Perrigo Co. Wyeth is part of Pfizer Inc. Martoma, 40, is appealing his conviction and nine-year prison term. Cohen has not been criminally charged. Point72 stopped accepting outside money and now invests Cohen's fortune from its Stamford, Connecticut, offices.
<span id="midArticle_12"/>The cases are Kaplan et al v. SAC Capital Advisors LP et al, U.S. District Court, Southern District of New York, No. 12-09350; and Birmingham Retirement and Relief System et al v. SAC Capital Advisors LP et al in the same court, No. 13-02459. (Reporting by Jonathan Stempel in New York; Editing by Ted Botha)
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<span id="midArticle_0"/>By Jonathan Stempel
<span id="midArticle_1"/> (Reuters) - A federal judge dismissed claims by former Elan Corp and Wyeth shareholders accusing billionaire investor Steven A. Cohen's SAC Capital Advisors LP of violating federal racketeering law by conducting insider trading in the drugmakers' stocks.
<span id="midArticle_2"/>In a decision made public on Tuesday, U.S. District Judge Victor Marrero in Manhattan said the civil claims brought under the Racketeer Influenced and Corrupt Organizations Act could not be pursued on the basis of SAC's having pleaded guilty in 2013 to related criminal charges.
<span id="midArticle_3"/>The claims had been added in September to a still-pending fraud lawsuit against SAC, its CR Intrinsic affiliate, Cohen, convicted former CR Intrinsic portfolio manager Mathew Martoma, and former University of Michigan professor Sidney Gilman.
<span id="midArticle_4"/>Investors claimed to have suffered damages by trading in Elan and Wyeth while Martoma was generating $275 million of illegal gains for SAC by trading on Gilman's secret tips about an Alzheimer's drug trial, before results were released on July 29, 2008.
<span id="midArticle_5"/>Now known as Point72 Asset Management, SAC pleaded guilty to fraud and paid $1.8 billion in criminal and civil settlements with U.S. authorities.
<span id="midArticle_6"/>But Marrero said SAC did not plead guilty to insider trading in Elan and Wyeth, and thus the investors could not claim they were defrauded under RICO "in connection with" that trading.
<span id="midArticle_7"/>The judge also said it would be unfair to hold defendants such as SAC and CR Intrinsic civilly liable.
<span id="midArticle_8"/>"To hold otherwise would mean, in essence, a defendant charged with multiple securities fraud violations cannot plead to only some of those frauds without opening the door to civil RICO claims on all of the alleged frauds," Marrero wrote. That would not be a "sensible interpretation" of the law, he added.
<span id="midArticle_9"/>Ethan Wohl, a lawyer for the investors, did not immediately respond on Tuesday to requests for comment.
<span id="midArticle_10"/>A Point72 spokesman said the firm was pleased with the decision, which is dated April 27.
<span id="midArticle_11"/>Elan is now part of Perrigo Co. Wyeth is part of Pfizer Inc. Martoma, 40, is appealing his conviction and nine-year prison term. Cohen has not been criminally charged. Point72 stopped accepting outside money and now invests Cohen's fortune from its Stamford, Connecticut, offices.
<span id="midArticle_12"/>The cases are Kaplan et al v. SAC Capital Advisors LP et al, U.S. District Court, Southern District of New York, No. 12-09350; and Birmingham Retirement and Relief System et al v. SAC Capital Advisors LP et al in the same court, No. 13-02459. (Reporting by Jonathan Stempel in New York; Editing by Ted Botha)
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