Former SAC Capital Advisors portfolio manager Mathew Martoma has urged a federal judge to dismiss two insider trading charges tied to his firm's sales of Elan's US depositary receipts.

Mr Martoma, who is charged with the biggest insider trading scheme in US history, cited a US Supreme Court ruling in 2010, Morrison v National Australia Bank, that said US laws do not protect foreign investors who buy stocks on overseas exchanges.

He was charged by the US in November, accused of helping the hedge fund founded by Steven Cohen make $276 million using illegal tips about bapineuzumab, a prospective drug to treat Alzheimer's disease.

The US alleged that after getting a tip from a neurologist who was head of the safety monitoring committee for the drug trial, Mr Martoma traded on Elan ADRs and shares of Wyeth.

Mr Martoma has denied wrongdoing and is scheduled to go on trial in November.

"Mr Martoma respectfully requests that this court dismiss all charges related to transactions in the securities of Elan Corp plc, an Irish corporation with stock publicly traded on the Irish and London stock exchanges," Mr Martoma's lawyer, Richard Strassberg, said in court papers. US securities law "does not reach Mr Martoma's purchases and sales of Elan ADRs should be dismissed".

The US Securities and Exchange Commission alleges Mr Martoma's source was Sid Gilman, a University of Michigan neurologist who was has entered into a non-prosecution agreement and is co-operating with the US.

In mid-July 2008 the doctor passed Mr Martoma secret data showing that drug, known as bapi, failed to halt progression of Alzheimer’s in patients in the clinical test, the state said. When Mr Martoma learned the companies would report negative data on the drug he had a 20-minute phone call with Mr Cohen, according to the government.

The hedge fund owner, at Mr Martoma’s recommendation, sold off almost all of the fund’s $700 million position in Elan and Wyeth, then sold the stock short, prosecutors claimed.

When the clinical trial results became public, shares in both companies plunged, allowing the hedge fund to make $276 million in profit and losses avoided, according to the government.

Mr Martoma, who worked for SAC’s CR Intrinsic unit, received a $9.3 million bonus as a result, according to the indictment.

SAC Capital agreed in March to pay almost $602 million to settle SEC claims tied to the Martoma trades without admitting or denying wrongdoing. – (Bloomberg)