Mathew Martoma, 39, has pleaded not guilty to one count of conspiracy to commit securities fraud and two counts of securities fraud.
The trial is scheduled to begin today in the federal district court in Lower Manhattan, with 80 potential jurors filling out questionnaires to determine whether they can be fair. A jury of 12 with four alternates will hear the case.
Martoma, the son of Indian immigrants, faces as many as 20 years in prison on the securities fraud charges and five years on the conspiracy charge if convicted.
Manhattan's India-born top federal prosecutor Preet Bharara, who had brought the case against Martoma, described the charges as "the most lucrative insider trading scheme ever charged".
Martoma was arrested in November 2012 from his home in Boca Raton, Florida and has been freed on a USD five million bail.
A Stanford graduate, Martoma joined the hedge fund company SAC Capital Advisors in 2006 and had worked with the firm's affiliate CR Intrinsic Investors.
The trial, which is expected to last nearly a month, will shed light on any role SAC founder Steven Cohen has in the trades at the center of the cases. Cohen has not been charged with any wrongdoing.
In a yesterday's ruling, presiding judge Paul Gardephe said prosecutors cannot introduce evidence that Martoma had fainted when FBI agents approached him in November 2011 on the lawn of his USD 1.9 million Boca Raton home, telling him that they wanted to talk "about insider trading" at SAC.
The judge said it would not be appropriate to assume Martoma fainted because he knew he was guilty.
"In the life of such a person - someone with no criminal record and no prior involvement with the criminal justice system - such an encounter is a watershed event," Gardephe said.
Federal prosecutors have accused Martoma of using material, non-public information that he received from a doctor in 2008 on the clinical trial of an Alzheimer's disease drug to make profits and avoid losses for SAC in an amount totaling approximately USD 276 million.
According to allegations in the three-count criminal complaint, Martoma exploited his personal and financial relations with a leading doctor who chaired the Safety Monitoring Committee (SMC) for the trial.
Martoma obtained inside information about the drug trial that the doctor Sidney Gilman learned at the SMC meetings and through other communications with drug companies Elan and Wyeth.
Bharara has led the government's massive crackdown on insider trading and won convictions against prominent Wall Street executives like ex-Goldman director Rajat Gupta and billionaire hedge fund founder Raj Rajaratnam.
Since October 2009, 78 people have either pleaded guilty or been convicted on insider trading charges.
The trial comes close on the heels of last month's insider trading conviction of another SAC employee, Michael Steinberg, and SAC's guilty plea in November to insider trading charges.