Jurors found a former Perella Weinberg Partners LP banker guilty in a major victory for prosecutors worried a recent appeals court ruling had tied their hands in fighting insider trading.
Sean Stewart, 35, was convicted of tipping his father to five health care mergers he learned about at Perella Weinberg and previously at JPMorgan Chase & Co. In convicting Stewart on all nine counts, the jurors rejected claims that he’d been betrayed by his father, who lied to him about trading on inside information.
“It was very unfair,” Claudia Stewart, Sean’s mother, said after the jury of eight men and four women delivered their verdict in Manhattan federal court on Wednesday. “You have to know how devastating this is right now.”
The conviction signals that prosecutors haven’t been totally hobbled by a 2014 appeals court ruling that requires more from the government to prove insider trading. After that decision, which reversed the trial conviction of two traders, prosecutors dropped charges against a dozen others.
The U.S. Supreme Court last year declined to consider the case, prompting the U.S attorney in Manhattan, Preet Bharara, to warn that the new standard provides a “potential bonanza” for insiders leaking to friends and family. This year, though, they have brought charges against eight people and have now won the Stewart case.
The jury delivered the verdict on the sixth day of deliberations, having reached the decision on Tuesday but deciding to sleep on it, according to one of the panel members, Carmela Raiti of Putnam County.
“It’s fair to say this is a family tragedy,” Raiti said. “Nothing we do in life is isolated from those we know and love.”
She declined to say why it took five days to reach a verdict, although she admitted some issues divided the jury members along the way.
“We gave him as fair a consideration as you could give to anyone,” said jury member Emanuel Palermo.
Stewart is scheduled to be sentenced Feb. 17 and faces as long as 20 years in prison on the most serious charge. In his only comments, Stewart told the judge he understood he’d face consequences if he violated his bail conditions before sentencing.
“We’re obviously disappointed,” said Martin Cohen, one of Stewart’s lawyers. “We think the jury got it wrong.”
Carrie Cohen, a former federal prosecutor in Manhattan who’s now a white-collar defense lawyer at Morrison & Foerster LLP in New York, said that while the verdict wasn’t surprising, the jury may have been held up by the intricacies of the father-son relationship at the center of the case.
“Some of the jurors, I assume, were parents and they know that children talk to their parents about what’s going on in their lives — that may have struck a cord with jurors,” Cohen said in a phone call. In the end, Cohen said, the recorded conversation and other evidence may have helped them overcome any reservations.