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Posted on Wed, Nov 28, 2012 : 2:22 p.m.

Sidney Gilman, U-M medical professor in midst of insider trading scheme, retires

By Amy Biolchini

An 80-year-old University of Michigan neurology professor implicated in a federal investigation in an insider trading scheme has retired, U-M officials confirmed Wednesday.

U-M learned of the retirement of Dr. Sidney Gilman Tuesday, said Pete Barkey, public relations director for the U-M Health System. Gilman is accused of providing nonpublic information to a portfolio manager that led to massive, multimillion dollar trades.


Dr. Sidney Gilman

Courtesy U-M

Gilman is an Alzheimer’s disease expert and formerly served as the chairman of U-M’s Department of Neurology from 1977 to 2004. Most recently, Gilman has been the associate director of the Michigan Alzheimer’s Disease Research Center at U-M.

Barkey declined to discuss the details of Gilman’s pension. He said the decision to retire was Gilman's.

Prior to the announcement of his retirement, Gilman was a full employee at U-M, Barkey said. Gilman made $258,019 in 2011-12, according to the U-M pay database.

The U.S. Securities and Exchange Commission filed a complaint against Gilman Nov. 20, accusing Gilman of providing Mathew Martoma, a former portfolio manager at CR Intrinsic Investors, with nonpublic information about the outcomes of an Elan Corporation and Wyeth clinical trial of an Alzheimer’s drug that Gilman was overseeing between 2006 and 2008.

During the time that Gilman served as the chairman of the safety committee overseeing the clinical trial, he was employed as a $1,000-per-hour paid consultant for a New York expert networking firm that connected him with Martoma, according to the SEC complaint.

Gilman has entered into a non-prosecution agreement with the SEC and is cooperating with the federal investigation, according to his lawyer, Marc Mukasey.

Gilman has also agreed to pay $234,000 in disgorgement and prejudgment interest, and agreed to a permanent injunction against further violations of the federal securities act. The settlement agreement still has to be approved by the court.

U-M is conducting an internal review of Gilman’s involvement in the matter, and has declined to comment on how Gilman’s retirement affects the review process.

There is no date set for when U-M will make an announcement regarding the outcome of the internal review, Barkey said.

Saturday, U-M’s Executive Vice President for Medical Affairs Dr. Ora Pescovitz sent an email to all UMHS employees reminding them to follow industry policies and standards of integrity when it comes to releasing information.

"In our teaching, patient care and research roles, we are entrusted with confidential information of many types, and we work hard to never betray that trust. We are proud of our rich legacy and disappointed when we fail," the email reads.

Gilman has published nearly 400 scientific papers, book chapters and abstracts, according to his biography on U-M's website, and is currently on the editorial board for a number of medical journals. His legacy at U-M was marked in 2003 with the establishment of an annual lecture series — the Sid Gilman and Carol Barbour Lecture in Neuroscience — and an annual Neurology Service of U-M hospitals, which was named The Gilman Service.

He has served on the U.S. Food and Drug Administration's Peripheral and Central Nervous System Drugs Advisory Committee and as a consultant for a number of major pharmaceutical companies.

According to the Michigan Department of Licensing and Regulatory Affairs, Gilman's license to practice as a medical doctor expires in 2015.

Amy Biolchini covers Washtenaw County, health and environmental issues for Reach her at (734) 623-2552, or on Twitter.



Fri, Nov 30, 2012 : 4:41 p.m.

I'm not defending this fella because I/we do not have all of the details, but what happened to "innocent until proven guilty by a court of law"?


Sat, Dec 1, 2012 : 1:27 a.m.

Sir, Dr. Sidney Gilman can act as the prosecutor and the judge for he is truly aware and conscious of his own actions and can decide upon his innocence or guilt in this matter. I am sharing this opinion based upon my understanding of an anatomical structure called brain and its functions. If man is not a rational being, there will be no foundation for morals and ethics.

Jay Thomas

Fri, Nov 30, 2012 : 12:48 a.m.

It is nice to work for a public University. Other public employees are forced to retire before age 80.


Fri, Nov 30, 2012 : 4:49 a.m.

Where? As far as I know only first responders and pilots. Are there other roles that require earlier retirement? I thought it was based on the role ?


Thu, Nov 29, 2012 : 5:57 p.m.

The two-sides of the same coin: If neurology or neuroscience represents one side of the coin, psychology represents the second face of the same coin. We need to understand anatomy and physiology of human brain and relate it to human action and behavior. The University of Michigan will not be able to do the right thing until it discovers the connection between the two-sides of the same coin. We can create all kinds of rules, regulations, and policies and yet we often fail to regulate human behavior and action. We have to educate people about an internal guiding mechanism that enables harmonious interactions between different parts of the same individual. What has been described as illegal sharing of information simply reflects the fact of a lack of harmonious interaction between thought, emotion, and neuromuscular action.


Thu, Nov 29, 2012 : 4:31 p.m.

If you failed to keep confidential materials or information confidential, you should lose your rights to your benefits. I don't care how much you helped, you failed as a medical provider and as a person of trust. No way should he keep his benefits. He failed to represent UofM in a positive manner.

Basic Bob

Thu, Nov 29, 2012 : 5:33 p.m.

In addition, he should be escorted off campus and warned to never return. This was not a mistake or accident, it was a premeditated federal crime.


Thu, Nov 29, 2012 : 3:40 p.m.

The important issue here is what will UM and other research institutions do to ensure that the research that is carried out in an institution's name is not tainted by financial interests, and in particular the financial interests of huge drug companies. There is currently a clinical trial underway to test an Alzheimer's drug in a population of individuals who have not yet shown symptoms of the disease. The justification for this highly controversial trial is that NO drug to date has shown a clear unambiguous repeatable significant impact on the progression of this disease. TEN possible drugs were considered for use in this trial, because NO drug has shown a clear unambiguous repeatable significant impact on the progression of this disease. HOWEVER, MANY researchers have received millions of dollars to research these drugs, and drug companies have made MILLIONS of dollars selling these drugs to folks diagnosed with this disease, even though there is NO clear unambiguous repeatable significant evidence that ANY of these drugs actually has an effect. AMAZING. That seems like the important story here, and the issue that needs to be addressed. And I know folks who are choosing to delay their contributions to UM this year until UM steps up to the plate as one of the institutions willing to do something about this VERY serious systemic issue that greatly affects the health and well-being of so many patients. As the institutional affiliation for the largest insider trading scheme in US history, it seems appropriate for UM to accept that role.


Thu, Nov 29, 2012 : 3:22 p.m.


Basic Bob

Thu, Nov 29, 2012 : 5:28 p.m.

No question.

Ron Granger

Thu, Nov 29, 2012 : 2:33 p.m.

What does it take for someone to be fired from the U?

Jay Thomas

Fri, Nov 30, 2012 : 12:50 a.m.

Do something that costs the university money.


Fri, Nov 30, 2012 : 12:29 a.m.

research staff who brought scientific misconduct concerns to the leaders at UM.


Thu, Nov 29, 2012 : 12:52 p.m.

I could honestly care less about any protestations of innocence Mr. Gilman might have. As an 80-year-old neurologist, I expect him to know what is happening when a large hedge fund asks for his "opinion" on secret drug trials. PS, Mr. Gilman, they weren't interested in hearing about your grandchildren or your views on Obamacare for $1,000/hr.


Thu, Nov 29, 2012 : 12:42 p.m.

I know there's a bomb in a theater with 1,500 people crowded into the seats. A half-dozen people in the auditorium have paid me to tell them if I find out there's a bomb so they can leave. That doesn't mean I planted the bomb. But it does mean the people who didn't pay me are going to die.


Thu, Nov 29, 2012 : 12:31 p.m.

In early 2008 people were buying ELN stock since it gradually rose to a high of 36 on July 9th. Starting July 10th the stock slide for a week to 34. Gilman reportedly received and then passed the negative trial results around the 16th. Either a trigger purchase or "whipsaw" buy effort (as was done before the 1929 crash) occurred three times when the stock dropped to near 32 - on the 17th, 24th, and 28th. On the 29th the stock collapsed from nearly 34 down to 10 and has been there since. Clearly July 10th is a key date to start an investigation about who knew what and who sold. Between the 17th leaky date and 29th collapse some big losers invested big money to raise the price two bucks. That total money could be calculated by those who know about such things. If the price actually rose while SAC was unloading and made $M then clearly somebody else was buying and lost alot $M more, right?. Not that TIAA-CREF did.

Kai Petainen

Thu, Nov 29, 2012 : 4:08 a.m. "Who Sold Elan in 2008? (3 Reasons To Sell/Short Elan before It Collapsed)"

Kai Petainen

Thu, Nov 29, 2012 : 1:30 p.m.

50% is a lousy buy rating. analysts usually say buy and hold. rarely do they say sell. i can show you stock after stock where analysts say buy and hold and not sell. quite often, analysts will drop coverage of a stock (or they won't initiate coverage), before they have the nerve to say sell. in late 2011, GMCR ws trading at prices over $100. 9% of analysts had a sell rating, 73% had a buy rating.. the stock dropped and now it is in the 30s. GRPN, our local stock... about 6% of analysts had a sell rating on that, and 39% said buy. the stock plunged from $26 to $4. 28% is a high number of analysts recommending sell.


Thu, Nov 29, 2012 : 11:34 a.m.

Kai, nice article but you're stretching. Especially your third point. Although 28% of analysts had changed to sell, 50% had a buy rating. The change in each from the two previous quarters clearly is in the direction of buy/overweight by April 2008 and by June/July it had shifted even further to buy. Most of the analysts, without insider information, were betting on the drug to be successful. Anyone selling or shorting the stock would make a killing and this is exactly what happened and why insider trading is a crime.


Thu, Nov 29, 2012 : 3:27 a.m.

Sid Gilman is accused of leaking the negative information about the Alz drug PRIOR to the public release of this information. Gilman signed a non-prosecution agreement and is cooperating with the gov't and SEC. By signing the non-prosecution agreement, he has admitted guilt, but will likely serve no jail time. His cooperation will implicate the big fish, the trader. Nevertheless, Gilman leaked the negative confidential information early to the trader (which is illegal, per his signing a confidentiality agreement with the company), which allowed the trader to do a massive short on the stock, knowing in advance that it would fall dramatically after the negative information was made public. Gilman is guilty of several criminal acts and collusion in insider trading. Read the stories in the New York Times and other publications. He retires with his health insurance and 401K, which is likely substantial due to his high salary for many years. He leaves UM disgraced, but financially secure, and with no real consequences other than to his reputation. Turns out pretty lucky for him by cooperating. UM will "spin" this so their reputation isn't tarnished...too much anyway.


Thu, Nov 29, 2012 : 12:34 p.m.

How can UM's reputation not be tarnished? If not in fact, certainly in perception - which is much more pervasive than fact. Few news stories won't identify Dr. Gilman as a UM professor and researcher, and by association, however slight, UM's reputation's involved.

Angry Moderate

Thu, Nov 29, 2012 : 3:39 a.m.

And why should UM's reputation be tarnished by this? Do you have any evidence that they knew about it, or at least should have known about it? They employ thousands and thousands of people...of course some of them are scum, out of such a large sample.


Thu, Nov 29, 2012 : 2:56 a.m.

Kai Petainen notes: "The bad news about Elan would have come out anyways, and the stock would have dropped, anyways. The fall in Elan's stock price was not caused by the doctor. It's not "all because of the ego and greed of this man"." That's entirely correct, and worth underscoring. The sharp drop in Elan's stock, and the losses to investors, were caused by the bad clinical trial results, not by the early leaking of those results (if that's what happened). Such early leaking may well have shifted some of those losses, from the hedge funds that allegedly sold (and indeed sold short) on the leak to those who could not take advantage of such advance word. But the alleged leak did not cause the losses. Someone wondered "How many people lost their retirement savings having invested in Elan Corporation and Wyeth?" Anyone who had more than a small portion of their retirement savings in this one speculative and volatile biotech stock is in no position to blame anyone else for the loss of their retirement savings. An undiversified bet on any stock, whose performance depends on the unknown future results of clinical trials, is just plain nuts. One more point. The US Attorney, with knowledge of the facts far greater than those of us on the outside, decided not to prosecute Dr. Gilman, suggesting a much smaller culpability on Gilman's part than many on this comment thread have jumped to conclude.

Basic Bob

Thu, Nov 29, 2012 : 5:25 p.m.

Much smaller culpability.... He made less money on the transaction. He didn't initiate the relationship with the hedge fund manager. On the other hand, his ethics should have prevented the transactions. He bought his freedom, cheaply.


Thu, Nov 29, 2012 : 11:48 a.m.

"That's entirely correct, and worth underscoring." No, it's not entirely correct. If everyone had access to the same insider information at the same time then the stock would not have risen as high (i.e. there would not have been a significant "drop" because the stock price would already be low). Actions such as this destroy trust in the market and there is harm caused by this to average people. Trying to dilute the damage caused by this betrayal of trust is inappropriate. No, this is an ignominious end to an otherwise brilliant medical career. It is now a large signpost about greed and ego that will hopefully keep others on the path.

Kai Petainen

Thu, Nov 29, 2012 : 1:27 a.m.

I'm going to defend the doctor a bit -- just a bit. The bad news about Elan would have come out anyways, and the stock would have dropped, anyways. The fall in Elan's stock price was not caused by the doctor. It's not "all because of the ego and greed of this man". The firm that shorted it (if the allegations are true), was able to benefit and whoever was on the other end of the trade -- they were screwed... as one side had information that presumably the other side did not. So, for some traders... yes, they lost money unfairly. At that time, there were reasons to short Elan anyways -- as some felt that the stock was overvalued, and it was a 'speculative' stock. So, not everyone... who was shorting the stock, was doing it illegally. I'd presume most that were shorting it, were doing it quite legally, and they had good reasons to do it -- and probably some of those reasons had nothing to do with the outcome of the trials. There were unreasonable expectations that helped build up the anticipation for this stock... and when things weren't as positive, the stock collapsed. But, this is the nature of some stocks (especially some speculative biotech stocks)... in that the stocks build up on unreasonable expectations and speculation... bad news comes out... and the stock collapses. At that time, July 2008, Elan had an EPS of -0.15 and they missed it by a penny. Investors could have shorted the stock based just on that information -- that it had lousy earnings, a non-existent price/earnings and the firm missed it. Not to mention, analysts generally don't say 'sell', but at the time about 28% of the analysts had a 'sell' rating on the stock. Now, some will blame short sellers for the drop, but I'd like to point out that perhaps the problem lies not in the ones who shorted (legally), but in the ones that drove the stock up to unreasonable expectations, and funds exasperated it by buying into the momentum.


Thu, Nov 29, 2012 : 5:48 a.m.

Kai. Yer cutting this elderly prof too much slack. Three words: Greed. Greed. Greed.

Ed Kimball

Thu, Nov 29, 2012 : 1:14 a.m.

As someone pointed out in a post to an earlier story, according to the UM directory his name is "Sid", not "Sidney". Reminds me of a friend who didn't get his wedding announcement printed in a Cincinnati paper because the paper wouldn't print announcements that used nicknames and he wouldn't let them print it unless they used his given first name: "Bill".

Amy Biolchini

Thu, Nov 29, 2012 : 3:43 p.m.

Good question about Dr. Gilman's name. Dr. Gilman's lawyer confirmed that his full name was Sidney, and the SEC complaint is against "Dr. Sidney Gilman." Professionally, it appears that he goes by "Sid," as his medical license is under that name, as is his online bio at U-M.


Thu, Nov 29, 2012 : 1:09 a.m.

Once upon a time there was a simple law. An eye for an eye, a tooth for a tooth. Essentially meaning an equal amount is owed for the amount of damage done. This does not mean just return all that was taken. This means give back double that amount - the original plus an equal debt. Steal $276M then $276M is owed - or more - AFTER the stolen amount is returned and the original balance restored. Because it is possible to account for both compounded loss and gain by the parties involved, simple enforcement of the ancient law will go a long way towards arresting white lab-coat crime. Few able to do the math would put their bubbleland beneficiaries at risk of living a commoner's life of indentured servitude until the debt was fully repaid..


Wed, Nov 28, 2012 : 11:38 p.m.

There are more bigger fishes in the lake.


Thu, Nov 29, 2012 : 5:45 a.m.

@UtrespassM. Find the Fish! They stink from the head down. Ya ken?


Thu, Nov 29, 2012 : 12:48 a.m.

This shouldn't be "swept under the rug."


Wed, Nov 28, 2012 : 10:49 p.m.

Love it, let him go with all his benefits, yet fire the minions like the nurses and what not and let them suffer and lose all they worked for based on mere minor infractions of hospital policy or their respective public health code rules and regulations. What a farce the UMHS is.


Thu, Nov 29, 2012 : 5:29 p.m.

Angry Moderate, lack of good moral charecter can be considered a violation of the public health code. Anyhow, this guy is gonna get sued pretty soon by people who lost money, just like bernie Madoff. The best part is that he is actually going to provide sworn testimony that will make their case against him pretty easy. I'm sure those attorneys will bring the U of M along for the ride as well.


Thu, Nov 29, 2012 : 3:11 p.m.

And what about all of the low-paid "minions like the nurses" who are fired for UPHOLDING "hospital policy and their respective public health code rules and regulations" because such minions get in the way of bad apple higher-ups who are allowed a pass to do pretty much as they want....? While I'll withhold judgment and let the process play-out regarding Gilman, past UofM performance tells me that Gilman wont be hurting after the dust settles - even if Gilman is found guilty of being more knowingly involved or benefiting from this than has been reported. Gilman wont be hurting unlike too many of the UofM "minions" left go for doing what they are supposed to do.... A "farce" indeed....

Angry Moderate

Thu, Nov 29, 2012 : 3:37 a.m.

Huh? What nurses were fired for "minor infractions"? You think that public health codes aren't important?


Wed, Nov 28, 2012 : 10:23 p.m.

I still don't understand the doctrine of equal justice under the law of privilege and position.

Sam S Smith

Wed, Nov 28, 2012 : 9:43 p.m.

Sad but true, this happens all of the time and worse. We will never know about it. "The rich get rich and the poor get children. In the meantime, ain't we got fun."

Kai Petainen

Wed, Nov 28, 2012 : 9:39 p.m.

I represent myself on these boards and not the school. But, I do teach about stocks and portfolios, and I talk a LOT about ethics in that class. I cannot avoid this subject. It would be unethical of me not to talk about it. Here's my question: If a person is involved (if the accusations are true) in the largest inside job ever (does anyone sense a sequel to the movie, the "Inside Job" ?)... and the only punishment is a small removal of their money and then they retire... How is that punishment? What message does that send to the students? It sends a very lousy message. What if he was a non-tenured LEO prof? What if he was younger? What if he didn't have all these network connections? What is the message? Is it... "maximize your time on earth, take advantage of others, you can cheat and get ahead -- oh, don't worry... you won't be caught until it's late in your life, and then you can retire"? Is that the message? I hope not. In the words of President Coleman... what part do people not understand of this statement that she said: "But that is the Michigan way – we do the right thing. Period."

Kai Petainen

Thu, Nov 29, 2012 : 6:22 a.m.

Pineywoods.... long time ago I learned a phrase...."Leading in Thought and in Action" It's a phrase that can not only be used for work and school.... but as a way of how one should live. In that we are not only to lead in our thoughts, but in our actions... and we are to do the right thing - period.


Thu, Nov 29, 2012 : 5:42 a.m.

"Hang a thief when he's auld, and he'll no steal when he has Alzheimer's." — Robert MacQueen, Lord Braxfield, Lord Justice of Scotland, 1776-1799. I completely agree with courageous Kai. This is one of the Most Shocking Crimes ever committed by a faculty member of the University of Michigan! Federal Law allows the University to force-retire employees at age 70 (it is not "Age Discrimination" because there is a Retirement Program in place). Tell me Why the University keeps Oldsters on faculty. Stupid. Stupid. Stupid.

Angry Moderate

Thu, Nov 29, 2012 : 3:36 a.m.

The message is that if you give information to the prosecutors that allows them to bust some people instead of nobody at all, you will get a special deal. That's better than the alternative--and it doesn't distort people's incentives too much because they have no way of knowing in advance whether someone else will give evidence against them.

Kai Petainen

Wed, Nov 28, 2012 : 9:59 p.m.

"It is not in your sphere to decide on what might be an appropriate punishment without all the facts that the prosecutor and the University might have." I agree. I don't know what the appropriate punishment is. But, when this settles..... he can do something good. He can come to my class and to other classes and talk about what he did (if the accusations are true). He can talk about what happened... and how it impacted him. Students MUST learn something good and ethical from this, and he has a huge opportunity to teach others about it.

Always Amazed

Wed, Nov 28, 2012 : 9:45 p.m.

Knowing this man, the humiliation that this brings upon him is huge. And larger still since he brought it on himself through his actions. Do you think he should be jailed at 80 years of age? Even if you do, prosecutors decided not to charge him. We cannot presume that he is being let off easily because of his age, and it is impossible to predict what might happen to another individual in these circumstances. Perhaps you don't recall the Urology Chair scandal, or think it's ethical to continue to use the Taubman designation on UM buildings despite his criminal associations, or be aware that these faculty members are human--and some of them will do the wrong thing like anyone else. It is not in your sphere to decide on what might be an appropriate punishment without all the facts that the prosecutor and the University might have.

Dr. Fate

Wed, Nov 28, 2012 : 9:24 p.m.

I don't have any more outrage to add to the current comments, but a few things that popped out at me: 1. He's still consulting, teaching, practicing medicine at 80? Wow. 2. He was able to hand over over $200,000 just like that for the nonprosecutorial agreement? Somehow I don't feel too sorry for his financial state. 3. That is a lloooonnnggg CV. I got tired just scrolling through it. 4. How did he think he could get away with this? ... Alzheimer's?

Jay Thomas

Fri, Nov 30, 2012 : 12:52 a.m.

They made him give up one years salary. A slap on the wrist.

Angry Moderate

Thu, Nov 29, 2012 : 3:35 a.m.

At 80 years old, one would hope that he has more than $200,000 in the bank. Living expenses for 10+ years isn't cheap.


Wed, Nov 28, 2012 : 9:23 p.m.

Aw, come on, he's old........


Sun, Dec 2, 2012 : 6:51 p.m.

old enough to know better...


Thu, Nov 29, 2012 : 12:47 a.m.

Some people hurt by his actions may be old, too.


Wed, Nov 28, 2012 : 9:07 p.m.

He very likely (though we can't be 100% sure) made a good deal more than $258,019. Numbers in the public database only represent part of faculty members' salaries. This is from the explanation sheet provided along with the database at the UM Library's website: "...not included in this figure are monies that may be received by some University staff, such as: ... awards for distinguished professors, incentive payments, clinical service..."

Always Amazed

Wed, Nov 28, 2012 : 9:07 p.m.

He was offered and accepted a non-prosecution agreement, so that ship has sailed.


Wed, Nov 28, 2012 : 9 p.m.

Retired or not, he needs to be prosecuted to the fullest extent of the law! WHAT KIND OF MESSAGE DOES THIS SEND OTHERWISE!


Wed, Nov 28, 2012 : 8:44 p.m.

If he's guilty, he should be prosecuted to the full extent of the law. You'd think making the salary he was, and the various perks that come with a senior position, not to mention a medical one, would have been sufficient. What an ego.

Great Lakes Lady

Wed, Nov 28, 2012 : 8:36 p.m.

How many people lost their retirement savings having invested in Elan Corporation and Wyeth...or having invested in funds that included stocks from these corporations? All because of the ego and greed of this man??


Wed, Nov 28, 2012 : 8:32 p.m.

EMU's Jim Vick was permitted to retire as well, after it was determined that he covered up a murder investigation. What has happened to real, meaningful consequences for actions by high profile members of the Ann Arbor - Ypsilanti community? Permitting Vick and GIlman to retire, presumably with pay and benefits, is disgusting. Shame on U-M and EMU.


Thu, Nov 29, 2012 : 12:04 p.m.

No, I don't mean that Gilman and Vick should be forced to continue working. I mean that they should have been fired and they should not receive retirement pay or benefits. "Retire" implies they're leaving employment voluntarily, at the natural end of tenure.

Angry Moderate

Thu, Nov 29, 2012 : 3:34 a.m.

What do you want them to do, physically force him to keep working against his will? I don't think that retiring will prevent the SEC and federal prosecutors from going after him.


Wed, Nov 28, 2012 : 8:12 p.m.

It was the honorable thing to do....


Fri, Nov 30, 2012 : 9:32 p.m.

...not ! he did not fall on a sword, but into blissful, financially and medically safe life, about 15 yrs after he should have been retired ! It's a shame and a travesty.


Thu, Nov 29, 2012 : 12:33 p.m.

If that's sarcasm, that's funny. If its not; spare me.