This could be a landmark case which sets the scope for insider trading.
In what could result in a landmark ruling, a former Wall Street investment banker is set to face off federal prosecutors in a first case of insider trading since a U.S. appeals court curtailed their ability to pursue such cases.
Sean Stewart, an ex-banker at JPMorgan Chase & Co and at Perella Weinberg Partners has been accused of supplying privileged information to his father regarding yet-to-be-announced healthcare mergers.
According to prosecutors Robert Stewart, Sean’s father and an acquaintance Richard Cunniffe, who used to work at a boutique investment bank, the trio made $1.16 million based on trading tips on 5 healthcare deals provided by Sean Stewart.
The case has resulted in guilty pleas by Cuniffe and Robert Stewart, who according to the prosecution had secretly recorded Sean Stewart of criticizing his father of not following up on a trading tip.
“I handed you this on a silver platter and you didn’t invest in this,” said Sean to his father Robert Stewart according to the prosecution.
However, according to court records, Sean Stewart is expected to argue that he expected his father to keep the information secret and not act on it.
“After a year of being dragged through the mud, he is looking forward to clearing his name at trial,” said Martin Cohen, Sean Stewart’s lawyer.
This is the first trial since Preet Bharara’s office, suffered a major setback in 2014 with an appellate court limiting the scope of laws for insider trading which then resulted in the dropping or dismissal of charges against 14 people.
In this case, Bharara has charged 107 people with insider trading since 2009.
Earlier, the 2nd U.S. Circuit Court of Appeals had held that in order to prove insider trading, the prosecution must first establish that a tipper in fact received a benefit from the exchange of information that was not just limited to friendship but has to be of “some consequence,” such as monetary benefits.
The U.S. Supreme Court is likely to examine such an issue, in October, in a matter related to a different case.
According to the prosecution, there is evidence to show that Sean’s father used some of the trading profits to pay $10,055 for his son’s wedding.
Sean’s lawyers have called this linking of trading profits to Sean’s wedding, “ludicrous” as it is an accepted custom for the groom’s parents to bear some of the wedding costs.
The case is U.S. v. Stewart, U.S. District Court, Southern District of New York, No. 15-cr-00287.
Categories: Regulations & Legal, Strategy
manageria.biz 
Leave a comment