Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Insider trading by ex-banker's father becomes focus in U.S. trial

Reprints

(Reuters) — The relationship between a former Wall Street investment banker charged for insider trading and his father, who traded on information about mergers he learned from him, took center stage at the start of the son's trial on Wednesday.

Assistant U.S. Attorney Brooke Cucinella told jurors in Manhattan federal court that tips by Sean Stewart, an ex-banker at Perella Weinberg Partners and JPMorgan Chase & Co., enabled his father and another man to make over $1 million trading.

"It's not hard to get an A when someone has already given you the answers to the test," Ms. Cucinella said in her opening statement.

But Mark Gombiner, a defense lawyer, said while the father, Robert Stewart, did illegally trade on information he learned while talking to his son, Sean Stewart had no idea that his father was doing so.

"He ended up betraying his son, as he was weak and foolish and selfish," Mr. Gombiner said.

The trial stems from one several insider trading cases pursued by Manhattan U.S. Attorney Preet Bharara's office, which has charged 107 people since 2009.

The trial is his office's first since suffering a major setback in 2014, when an appellate court limited the scope of insider trading laws, causing charges against 14 people to be dropped or dismissed.

Prosecutors contend Sean Stewart, 35, tipped his father about five unannounced health care deals from 2011 to 2014, enabling Robert Stewart and an acquaintance, Richard Cunniffe, to make $1.16 million.

The case has already resulted in guilty pleas by Robert Stewart, 61, and Cunniffe, 61, who, Ms. Cucinella told jurors, cooperated with the Federal Bureau of Investigation and secretly recorded the elder Stewart discussing the scheme.

In one recording, Ms. Cucinella said, Robert Stewart discussed how his son had been serving him up inside information on a "silver platter."

Sean Stewart kept tipping his father even after being questioned by JPMorgan in connection with a regulatory inquiry about trades by his father before the announcement of the 2011 buyout by Apax Partners of Kinetic Concepts Inc.

Mr. Gombiner acknowledged his client, worried about potential repercussions, lied to JPMorgan about telling his father anything about that deal.

But he said the investment banker loved his father and trusted him to not execute trades, which he did amid financial struggles based on names of companies his son mentioned while talking about his work.

"Sean Stewart is absolutely, unequivocally innocent," he said.

The case is U.S. v. Stewart, U.S. District Court, Southern District of New York, No. 15-cr-00287.

Read Next

  • U.S. rekindles insider trading push

    (Reuters) — A portfolio manager at hedge fund Visium Asset Management LP was criminally charged on Wednesday with insider trading, in one of the biggest such cases since a 2014 court ruling made it harder for U.S. prosecutors to pursue them.