Officials at the University of Michigan Health System are “carefully reviewing” the involvement of Neurology prof. Sidney Gilman in the biggest insider trading scheme ever busted by federal authorities.

The U.S. Securities and Exchanges Commission alleged that Gilman gave non-public information about a clinical trial for an Alzheimer’s drug to Matthew Martoma, a portfolio manager at CR Intrinsic Investors, allowing Martoma’s hedge funds and other related funds to accumulate more than $276 million in profits and avoided losses prior to a negative public announcement about the trials in July 2008.

UMHS spokesman Pete Barkey said in a statement Wednesday that Gilman’s involvement in the scheme is being reviewed by administrators, but he continues to be employed as a “full professor” in the department of neurology.

“The University of Michigan takes this situation very seriously and is carefully reviewing Dr. Gilman’s involvement,” Barkey said. “There is an ongoing legal process, and we recognize the importance of letting that process occur. The University of Michigan has comprehensive guidelines in place to govern activity in both clinical trials and for University employees engaged in consulting work, and any actions taken will be in accordance with University policies.”

Barkey did not immediately respond to a request for UMHS guidelines regarding clinical trials or consulting, and the protocols were not clearly available online.

Gilman — who served as safety monitoring chair for the trials — was allegedly paid about $100,000 for providing Martoma with constant information regarding the Safety Monitoring Committee’s meetings, as well as the results of the trials before he was scheduled to publicly announce them in late July 2009. He reportedly received $79,000 from Elan Coporation, a maker of the drug in conjunction with Wyeth, Inc., for overseeing the clinical trials of Bapineuzumab.

Gilman served as a consultant for Martoma, arranged through an expert network firm. The SEC has not named the expert network firm in the case, but Gilman’s resume notes that he has held a consulting position with Gerson Lehrman, among several other firms, since 2002. The Wall Street Journal reported Tuesday that individuals familiar with the case have confirmed that the expert network firm used in the scheme was Gerson Lerhman.

Gilman signed a non-prosecution agreement with prosecutors, in which he has agreed to settle the charges and cooperate in this case and related investigations in return for not being criminally charged. He has already agreed to pay $234,000 in settling the case.

Marc Mukasey, Gilman’s lawyer, said in a statement that Gilman is cooperating with federal authorities.

“We are thankful that the US Attorney’s Office decided not to charge Dr. Gilman with a crime, or to prosecute him,” Mukasey said. “We will continue to cooperate fully with the S.E.C. and the US Attorney’s office.”

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