An ex-Wall Street investment banker was convicted on Wednesday of engaging in insider trading by tipping his father off to unannounced healthcare mergers, a victory for prosecutors after an appellate ruling made it harder to pursue such cases harder. Sean Stewart, who previously worked at Perella Weinberg Partners and J.P. Morgan Chase & Co, was found guilty by a federal jury in Manhattan on all nine counts he faced, including securities fraud.
Stewart, 35, a Yale University graduate, displayed no emotion as the forewoman read the verdict, which came on the sixth day of deliberations following prior signs the jury was struggling to reach a consensus. "I think it's fair to say this is a family tragedy," said Carmela Raiti, one of the jurors. Martin Cohen, a lawyer for Stewart, said: "We're obviously very disappointed. We think the jury got it wrong."
Stewart had testified in his own defence. He was one of 107 people accused of insider trading since 2009 by prosecutors under Manhattan US Attorney Preet Bharara. His trial was Bharara's first since a 2014 appellate ruling narrowed the scope of insider trading laws. Prosecutors said that from 2011 to 2014, Stewart provided his father Robert tips about five mergers, including INC Research's acquisition of Kendle International Inc, so his father could make lucrative trades before the deals were announced.
Robert Stewart, 61, in some instances had a friend he met working at a real estate firm, Richard Cunniffe, conduct trades in his own accounts, because of concern he was too close to the source, prosecutors said. The trading enabled the elder Stewart and Cunniffe, 62, to make $1.16 million, prosecutors said. Robert Stewart, an accountant in Long Island, was sentenced in May to a year of home detention after pleading guilty in August 2015.
Cunniffe pleaded guilty in May 2015. Previously, prosecutors said, he secretly recorded Robert Stewart saying his son criticised him for not trading on a tips he handed him on a "silver platter."
Lawyers for Sean Stewart acknowledged he spoke with his father about companies involved in mergers, but said he did so while discussing his work, and that Robert Stewart betrayed him by trading on the information. "I never gave my father information so he could trade on it," Stewart testified. While jurors heard recordings of Robert Stewart, he did not testify at trial, after he invoked his constitutional right against self-incrimination following a subpoena from his son. The case is US v. Stewart, US District Court, Southern District of New York, No 15-cr-00287.
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