Jury finds investment banker guilty of insider trading

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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.

"We have a lot of issues on appeal," he said.

In a release, U.S. Attorney Preet Bharara said: "Time and time again, Sean Stewart took his clients' most sensitive corporate secrets and fed them to his father on a silver platter for quick and illegal profits."

The father, Robert Stewart, was sentenced to one year of home detention after pleading guilty to an insider trading charge.

Prosecutors said evidence, including the timing of pivotal meetings regarding the corporate deals and subsequent trades in securities by the father and communications between the father and son soon afterward, made it obvious the son tipped his father intentionally.

The father received about $150,000 while the stock broker got the rest of $1.1 million in profits, though prosecutors say the son benefited when his father used some of proceeds to pay for Stewart's wedding rehearsal dinner and for a wedding photographer. Richard Cunniffe, who executed some of the securities trades for Stewart's father, pleaded guilty to insider trading charges and testified at the trial.

The effort to show Sean Stewart received something in return for sharing secrets was important after the 2nd U.S. Circuit Court of Appeals in December 2014 changed the landscape of insider trading law by saying prosecutors needed to show that the person supplying secrets received something of value in return. Stewart's trial was the first to occur in Manhattan since that ruling.

Testifying over two days, Stewart insisted he did nothing wrong, though he acknowledged breaking the rules of his employers when he talked openly and casually about secret deals with his family. He said he never told his father the dates that mergers would occur or the size of the deals, though he said he told his father that the timing of one of the deals conflicted with his scheduled spring 2001 wedding date.

"I am innocent," Stewart testified. "I never ever gave my father information expecting him to trade."

Prosecutors told jurors that Stewart continued to tell his father inside information even after he was confronted by JPMorgan lawyers about stock trades his father made surrounding a merger of companies the son helped arrange in early 2011. They said the father traded based on information he received from his son about four additional mergers afterward.

Throughout the trial, defense lawyers blamed the father.

Sean Stewart had testified that his father's bad acts "resulted in the loss of my career and reputation."

In her closing, Assistant U.S. Attorney Sarah McCallum said Stewart "five times ... handed his father tomorrow's news today."

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