By Bob Ritzema
Last October, the New Yorker published an article about the biggest hedge fund scandal of all time. The scandal involved insider trading by billionaire hedge fund manager Steven A. Cohen and his fund, S.A.C. Capital Advisors. In 2008, a clinical trial of the drug bapineuzumab, which was thought to be a breakthrough for Alzheimer’s treatment, ended after mostly negative results. Right before unfavorable information about the drug was released, Cohen’s fund switched from a three-quarter billion dollar investment in pharmaceutical companies Elan and Wyeth, which had invested vast sums developing the drug, to a huge bet against those companies. Elan and Wyeth stock fell on the information, netting Cohen 275 million dollars. The problem was, Cohen’s firm was privy to insider information, and trading on such information is a crime.
How had the results of the drug trials leaked out? As Patrick Radden Keefe tells in the New Yorker article, the leaker turned out to be Dr. Sid Gilman, 76 years old at the time. Gilman had been the chair of the Neurology Department at the University of Michigan Medical School for many years and was privy to the details of the bapineuzumab study. Was Gilliam trying to enrich himself through the disclosure? Not at all. In fact, he never intended to leak the information.
Gilliam had come to the U of M in 1977, and had a productive career despite a personal tragedy: in 1983, the oldest of his two sons committed suicide. Whether in reaction to this loss or for some other reason, Gilman became a mentor to others. Keefe puts it like this:
“Over the years, however, Gilman became a father figure to dozens of medical residents and junior colleagues. ‘Helping younger people along—that was a constant,’ Kurt Fischbeck, a former colleague of Gilman’s who now works at the National Institutes of Health, told me. Gilman was ‘incredibly supportive’ of younger faculty, [protégé Anne] Young said. ‘He would go over grants with us, really putting an effort into it, which is something chairs rarely do’.”
In 2006, Gilman received a call from Mathew Martoma, who had recently joined S.A.C. as an analyst for healthcare stocks. Martoma requested that Gilman serve as a paid consultant, and Gilman agreed, with the understanding that he would not share any information that wasn’t publicly available. They talked often over the next few years. Gilman found Martoma to be a bright and curious young man who seemed to share the researcher’s passion for finding an Alzheimer’s cure. So, when Martoma asked for details about the bapineuzumab trial, Gilman thought it was just a matter of curiosity, not an attempt to acquire confidential information. When Martoma pressed, the results “slipped out.”
Investigators eventually uncovered all of this, and Gilman’s career ended in disgrace. Martoma fared worse; he began a nine-year prison sentence in November, 2014. Gilman testified in Martoma’s trial, and, during his last day on the stand, was asked what set Martoma apart from other investors he had dealt with. Here’s his reply:
“He was personable…. And he, unfortunately, reminded me of my first son. In his inquisitiveness. His brightness. And, sadly, my first son was very bright also, and committed suicide.”
As I wrote recently, generativity, a term coined by psychonalyst Erik Erikson, consists of creating or nurturing some project or person that will outlast oneself. Those who mentor, instruct, or encourage those who are younger or less experienced are being generative. Generativity is characteristic of well-adjusted adults in midlife and beyond, and is considered a mark of emotional maturity. Yet, as with Dr. Gilman, a desire to help others can leave one vulnerable to manipulation. I wonder how many seniors who fall for scams are simply interested in helping some nice young person who, unbeknownst to them, is actually a con artist?
As we age, it’s natural that many of us want to help those younger than us. It’s important, though, to be mindful that a small subset of those we’re interested in helping intend to take advantage of us. Be generative, but do so cautiously.
By Bob Ritzema