In an interesting ruling, a New York federal judge ruled that “[f]ormer SAC Capital Advisors portfolio manager Mathew Martoma cannot introduce excerpts from a deposition of his former boss, billionaire Steven A. Cohen, in his defense against criminal insider trading charges …,” as Reuters reports here. Martoma had sought to introduce Cohen’s prior testimony under an exception to hearsay in Federal Rule of Evidence 804(b)(1).
The Rule provides that prior testimony from an unavailable witness is not excluded by the rule against hearsay when the testimony was given at a “trial, hearing, or lawful deposition” and the testimony “is now offered against a party who had–or, in a civil case, whose predecessor in interest had–an opportunity and similar motive to develop it by direct, cross-, or redirect examination.”
Cohen provided prior testimony during a deposition while SAC Capital was under investigation by the U.S. Securities and Exchange Commission (SEC). Martoma’s argument was that Cohen provided prior testimony and the SEC had the opportunity to cross-examine Cohen and, since the SEC is the same party–the U.S.–as federal prosecutors in the current trial, this testimony meets Rule 804(b)(1)’s exception.
The judge ruled, however, that Cohen’s prior deposition testimony that was taken while he was under investigation by the SEC is not admissible in Martoma’s trial because the SEC’s motive to cross-examine the witness was not the same as U.S. prosecutors’ motive at trial.
Though the judge’s ruling is inherently logical to a degree, one wonders whether judges grant other entities, such as businesses and individuals, the same deference and consideration in finding that the motive to cross-examine a witness was different at an earlier stage of the litigation.