Jury finds investment banker guilty of insider trading

[Judi Lynn]

Source: Associated Press

Jury finds investment banker guilty of insider trading

Larry Neumeister, Associated Press

Updated 5:19 pm, Wednesday, August 17, 2016

NEW YORK (AP) — A Yale-educated investment banker was convicted of insider trading charges Wednesday after a jury concluded he gave tips about mergers and acquisitions to his father, enabling over $1 million in illegal profits.

Sean Stewart, 35, testified during the two-week Manhattan federal court trial, insisting he had no idea his father was sharing secrets with a broker to make trades ahead of public announcements on five separate deals that he oversaw while working at JPMorgan Chase & Co. and Perella Weinberg partners LP.

As the verdict was read, Stewart was stoic, though he turned to look at his mother on a bench behind him. Sentencing was set for Feb. 17 for the Manhattan resident.

Stewart's lawyer, Mark Gombiner, said the defense was damaged when Judge Laura Taylor Swain ruled that Stewart's father could use the Fifth Amendment to avoid testifying.

Read more: http://www.chron.com/news/crime/article/Jury-finds-investment-banker-guilty-of-insider-9147854.php

[dixiegrrrrl]

1. Ha! So the father sold the kid out! Love it!

Not sure the kid's lawyer should have asked for a jury trial. Folks are pretty much wise to bankers now, and not feeling too sympathetic.

[nitpicker]

2. Link to DoJ PR

https://www.justice.gov/usao-sdny/pr/managing-director-investment-bank-found-guilty-insider-trading-charges

(snip)

According to the allegations contained in the Indictment as well as the evidence presented during trial:

In early 2011, SEAN STEWART, who at the time held the position of Vice President in the Healthcare Investment Banking Group of a global bank headquartered in Manhattan (“Investment Bank A”), began tipping his father, Robert Stewart, with material nonpublic information about upcoming mergers and acquisitions, including with the names of the companies that were acquisition targets, both when the target was an Investment Bank A client and when the bank represented the acquirer, as well as with information that indicated the likely timing of an upcoming deal.

The first of these deals involved the acquisition of Kendle International Inc. by INC Research, LLC, which was announced publicly on May 4, 2011. SEAN STEWART worked on the deal, representing Kendle. Robert Stewart made about $7,900 in profits on purchases of Kendle stock executed in February and March of 2011. When questioned by the Securities and Exchange Commission about his Kendle trades in May 2013, Robert Stewart reported that he used the proceeds of those trades to pay expenses related to SEAN STEWART’s June 2011 wedding.

The second deal about which SEAN STEWART tipped Robert Stewart was the acquisition of Kinetic Concepts, Inc. (“KCI”) by Apax Partners, announced on July 13, 2011. Although Robert Stewart purchased some stock in KCI based on SEAN STEWART’s tip, he sold that stock before the acquisition was announced, around the same time that SEAN STEWART learned the Financial Industry Regulatory Authority (“FINRA”) was conducting an inquiry into Robert Stewart’s Kendle trading.
(snip)

When the KCI/Apax Partners deal was announced, Robert Stewart and Cunniffe reaped profits totaling approximately $107,790. At around this time, Robert Stewart told Cunniffe that the source of the KCI tip and the earlier Kendle tip had been Robert’s son. Later, around the spring of 2012, Robert Stewart clarified for Cunniffe that the son in question was SEAN STEWART, who worked on the “sell side” on Wall Street.
(snip)

During SEAN STEWART’s tenure with Investment Bank B, based on tips concerning nonpublic acquisition-related information supplied by SEAN STEWART, Robert Stewart had Cunniffe conduct options trading in advance of the public announcements of three more deals: (1) the acquisition of Gen-Probe Inc. by Hologic, Inc., announced on April 30, 2012; (2) the acquisition, by tender offer, of Lincare Holdings Inc. by Linde AG, announced on July 1, 2012; and (3) the acquisition of CareFusion Corp. by Becton, Dickinson & Co. (“Becton”), announced on October 5, 2014. Investment Bank B represented Hologic in connection with its acquisition of Gen-Probe; Linde in connection with its acquisition of Lincare; and CareFusion in connection with its acquisition by Becton. The profits that Robert Stewart and Cunniffe reaped from illegal insider trading in advance of the announcements of these three deals totaled over $1 million.
(snip)