The jury deliberating over insider trading charges, leveled at an investment banker based on a quintet of medical device and life science acquisitions, reportedly told a federal judge last week that it’s deadlocked on at least 1 of the charges and that a unanimous verdict “may not likely happen.”
Prosecutors accused Sean Stewart, an investment banker for JP Morgan and Perella Weinberg Partners, of passing information on the deals to his father Robert Stewart and a 3rd man. Robert Stewart, who pleaded guilty last year, was sentenced in May 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, 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.
The jury in Sean Stewart’s trial ended its 4th day of deliberation August 12 with a note to Judge Laura Taylor Swain of the U.S. District Court for Southern New York, asking for advice if “the jury is at an impasse on a particular charge,” according to Bloomberg.
“Do we continue to deliberate until we come up with a unanimous decision, which may not likely happen?” the jurors asked, according to news reports.
Swain said the jury should not enter a verdict for individual charges if they can’t reach a consensus, according to Bloomberg. Sean Stewart, testifying last month, blamed his father for the charges, saying Robert Stewart lied to him about the insider trading and claiming through his lawyer that he’d never even met Cunniffe.
The jury is expected to reconvene tomorrow.
The deals in question
Prosecutors alleged that Sean 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 working as an advisor to Kendle on the deal. 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.
Apax Partners and a pair of Canadian pension funds agreed to acquire Kinetic Concepts Inc. for $6.3 billion in July 2011; the elder 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.