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Posted on Tue, Nov 27, 2012 : 8:50 a.m.

University of Michigan Health System mum on review process of Dr. Sidney Gilman

By Amy Biolchini

Editor's note: This story was updated at 5:45 p.m. with a link to an emailed message from Ora Pescovitz.

The University of Michigan Health System remains quiet on its review process of Dr. Sidney Gilman, a neurology professor who is accused of leaking information that lead to a massive insider trading deal.

“We are not going to describe the review process while it is ongoing,” according to an emailed statement Monday from Pete Barkey, director of public relations for UMHS.


Dr. Sidney Gilman

Courtesy U-M

Gilman, 80, of Ann Arbor, is a full employee with U-M’s Medical School, Barkey confirmed Monday afternoon. He's listed in a U-M pay database as earning $258,019.00 in 2011-12.

Wednesday, the University of Michigan announced it would be carefully reviewing Gilman’s involvement with the insider trading scheme.

During the weekend, an email was sent to all UMHS employees on behalf of Ora Pescovitz, executive vice president for medical affairs, UMHS CEO Douglas Strong and James Woolliscroft, dean of the Medical School, reminding employees to follow industry and hospital ethical standards with regards to releasing information.

The U.S. Securities and Exchange Commission has accused Gilman of providing nonpublic information regarding the outcome of a clinical trial of an Alzheimer’s drug that he was overseeing in advance of its official announcement in July 2008 to Mathew Martoma, a former portfolio manager with CR Intrinsic Investors LLC.

Martoma, 38, of Boca Raton, Fla., is being criminally prosecuted for allegedly using the information to trade stocks in advance of the study's public release.

Monday, Martoma was released from jail on a $5 million bail after his arrest last week on charges that between 2006 and 2008, he helped to engineer one of the largest insider trading frauds in history, the Associated Press reported.


Mathew Martoma, former SAC Capital Advisors hedge fund portfolio manager, exits Manhattan federal court Monday in New York after being released on $5 million bail.

Louis Lanzano | AP Photo

Gilman has entered into a non-prosecution agreement with the SEC under the direction of his lawyer, Marc Mukasey. He 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.

Gilman moonlighted as a $1,000 per hour medical consultant with a New York-based expert network firm that arranged phone calls between Gilman and Martoma, according to the SEC’s complaint.

During the time that Gilman served as chairman of the safety monitoring committee overseeing Elan Corporation and Wyeth’s Phase II trial of a new Alzheimer’s drug, he allegedly spoke with Martoma immediately after the committee’s meetings and gave his opinion on the study’s findings.

Gilman allegedly received more than $100,000 for his consulting appointments with Martoma and others at hedge fund advisory firms, according to the SEC complaint.

Gilman tipped Martoma off to the negative results of the trial two weeks before they were made public, which resulted in the sale of more than $960 million in Elan and Wyeth securities in about a week, according to the SEC complaint.

The deal enabled more than $276 million to be made illegally for Martoma’s fund and for the funds of others that Martoma allegedly shared the information with, the Associated Press reported.

When the study’s findings were publicly announced in July 2008, Elan and Wyeth’s shares declined by double-digits, according to the SEC.

Gilman has been a consultant to a number of major pharmaceutical companies, including to Elan and Wyeth from 2003 until 2009.

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



Wed, Nov 28, 2012 : 7 p.m.

The richer they are the greeder they get.


Wed, Nov 28, 2012 : 6:06 p.m.

Satisfaction in Life : At a fundamental level, this story makes us to look at the problem of finding satisfaction in life. Professor Gilman has worked for a long time, earned a very good salary, has status and a position of respect in the community, and has matured in age. Why would a person seek additional monetary satisfaction in his life? Apparently, he is not truly, and entirely satisfied with what he has. There is a desire or craving to enhance the earnings to find psychological satisfaction, and mental contentment. Even if I ignore the problem of morals, and ethical conduct or behavior, even if I ignore the legal issues of sharing information, I have to still understand as to how this person will find true happiness in life that would be a reflection of the fact of discovering satisfaction in life.


Wed, Nov 28, 2012 : 3:49 p.m.

I would be outraged if Dr. Gilman is permitted to work at the UMHS while the investigation is ongoing. His egregious behavior is not consistent with good patient care. I'm assuming Dr. Gilman has been escorted away from his office and has been relieved of his UMHS responsibilities and privileges. To be honest, I get a chill knowing that he took care of my Mom some years ago. Yes, doctors ARE held to a higher standard. Dr. Gilman need to leave UMHS immediately.


Wed, Nov 28, 2012 : 11:27 p.m.

He retired, full benefits;)


Tue, Nov 27, 2012 : 11:19 p.m.

How is that corporate compliance program working UMHS? You all getting it out and dusting it off to see what it allows and prohibits? Oh, and I imagine right about now that change to a "private" institution is very desirable since it would facilitate keeping this under wraps. Any idea if the Board of Medicine is questioning Dr. Gilman's alleged lack of good moral character?


Tue, Nov 27, 2012 : 7:41 p.m.

The last I checked the University of Michigan is a public entity that falls under FOIA. How is it that the UMHS can decline to release a letter it sent to its employees as an internal communication?, perhaps next time you could simply file an official FOIA request for it instead.


Wed, Nov 28, 2012 : 9:55 p.m.

Thanks Amy! We need people like you to help keep us informed. I'm glad you were able to get it so quickly. Bravo!


Wed, Nov 28, 2012 : 3:45 p.m.

Maybe the investigation of Dr. Gilman would constitute a "personnel matter" and therefore would be one of the permissible exemptions?

Kai Petainen

Tue, Nov 27, 2012 : 8:23 p.m.

It's absolutely ridiculous that you should have to file a FOIA for this. This is a major insider trading scandal that must be addressed, and how the school responds is incredibly important....

Amy Biolchini

Tue, Nov 27, 2012 : 8:08 p.m.

I asked for the email directly and was denied, and so I have filed a Freedom of Information Act with the University of Michigan for the email. FOIA requests to U-M can take weeks to return. has since obtained a copy of the email, and will be publishing it shortly.


Tue, Nov 27, 2012 : 6:13 p.m.

No surprises here, are there?


Tue, Nov 27, 2012 : 5:02 p.m.

Do we really need more evidence that our system of crony capitalism is rigged in favor of institutional investors at the expense of average folks.

Kai Petainen

Tue, Nov 27, 2012 : 3:53 p.m.

An article about an expert network firm.... "The investment was unusual because Gerson Lehrman, a so-called expert network firm that links hedge fund investors with experts in various fields, had been under scrutiny by regulators and the press for creating a business model that some said was tailor-made to foster insider trading on Wall Street. A hedge fund manager could call up Gerson Lehrman, ask to speak with an expert — often a current or former employee of a company that the hedge fund was considering investing in — and, for prices as high as $1,000 an hour, the "expert" would, with luck, divulge what he knew. A front-page article in The Wall Street Journal in 2006 provided a series of anecdotes of questionable information being sought by Gerson Lehrman's clients."


Tue, Nov 27, 2012 : 2:43 p.m.

Gilman was not really "accused" of being paid to leak info although in effect that is probably the fact yet to come to light. Gilman's pittance fee money was legal. His far more valuable information leak was not legal. Either he was working in a sting op or likely gained back much of the "value" risked. Here is the key observation about Gilman/UM/others possibly being paid the value difference illegally. "...and for the funds of others that Martoma allegedly shared the information with" Good job!


Tue, Nov 27, 2012 : 2:05 p.m.

Gilman received an early Christmas gift. If he really is guilty, he should be subject to a penalty equal to the crime, instead of this gift. Arrogance? Lack of good or common sense? Go figure!