Martoma may still have time to turn on Steven Cohen

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The announcement that SAC Capital has settled civil charges that it traded on insider information for $616 million is not the best news for Matthew Martoma.

Martoma is the portfolio manager who stands criminally accused of acquiring insider information about a drug and sharing that information with Steven Cohen, CEO of SAC Capital, which then traded on the information to spectacular gains. Martoma has decided to fight these charges and take his chances at trial, steadfastly refusing to testify against his old boss. But the bulk of the SEC's complaint against SAC Capital was about the drug trades that involved Martoma.

Now that the controversial hedge fund has settled the charges without admitting any guilt, what does that mean for Martoma? His hand certainly has not been strengthened.

There are two sides to the transaction. The conventional wisdom all along has been that prosecutors could not make a criminal case against Cohen with a direct witness. Martoma, it seemed, was doing Cohen quite a favor by not testifying against him. Had SAC Capital admitted to any wrongdoing it would have amounted to selling Martoma down the river.

As of now, it's unclear if anything has changed for Martoma, but there is still time for Martoma to cut a deal and turn state's evidence.

All this would have to happen relatively quickly. Fortune notes that the statute of limitations is running out, and the government would have to bring a case against Cohen by the end of the year. It is still possible but perhaps not likely. 

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