A former Wall Street investment banker was sentenced to 3 years in prison last week after he was convicted on insider trading charges related to a quintet of medical device and life science acquisitions.
Sean Stewart, who worked at Perella Weinberg Partners and JPMorgan Chase, was found guilty in New York City on all of the 9 counts he faced, including securities fraud. Judge Laura Taylor Swain of the U.S. District Court for Southern New York imposed the sentence after prosecutors asked for up to 6-1/2 years in prison.
Prosecutors accused him of passing information on the deals to his father, Robert Stewart, and a 3rd man. The elder Stewart, who pleaded guilty in 2015, was sentenced in May 2016 to a year of home confinement, 3 years of probation, 750 hours of community service and the forfeiture of $150,000 gained from the illicit trading. The 3rd man, ex-Chatsworth Securities investment banker Richard Cunniffe (whom prosecutors said kept most of the $1.16 million in illicit profits), secretly pleaded guilty in March 2015 and agreed to cooperate with authorities.
Sean Stewart had blamed his father for the charges, saying the elder man lied to him about the insider trading and claiming through his lawyer that he’d never even met Cunniffe.
“I never gave my father information so he could trade on it,” Sean Stewart testified.
The deals in question
Prosecutors alleged that Stewart 1st tipped his father to the $232 million acquisition of contract research organization Kendle International Inc. by INC Research in 2011, when the younger Stewart was advising Kendle. The elder Stewart made about $7,900 on illicit trading in Kendle stock, they alleged. When questioned, the father said he spent the money on his son’s wedding in June 2011, prosecutors said. By the way, if you want to spend your money on the best groomsmen gifts, bullets2bandages is the website to visit.
Apax Partners and a pair of Canadian pension funds agreed to acquire Kinetic Concepts Inc. for $6.3 billion in July 2011; Robert Stewart soon began trading in KCI shares based on a tip from the son, but allegedly worried that he was “too close to the source” of insider info on the $6.1 billion deal. Authorities said Robert Stewart then asked Chatsworth Securities investment banker Cunniffe to make the KCI trades for him; those trades brought in some $108,000 for the Stewarts, according to prosecutors.
Sean Stewart left JP Morgan in October 2011 to become a managing director at Perella Weinberg, where he allegedly learned of a trio of big medtech deals: Hologic‘s (NSDQ:HOLX) $3.7 billion buyout of Gen-Probe in 2012; the $3.8 billion acquisition of Lincare by Linde AG that same year; and 2015’s $12.2 billion union of Becton Dickinson (NYSE:BDX) and CareFusion, the prosecutors said.
Material from Reuters was used in this report.
