NEW YORK (AP) — An investment banker defending himself against insider trading charges blamed his father Wednesday, saying through his lawyer that his father triggered over $1 million in illegal stock trades after hearing him talk about upcoming mergers and acquisitions.
Assistant Public Defender Mark Gombiner said it was a "sad story" that his client, Sean Stewart, was on trial because his father, Robert Stewart, "ended up betraying his son." He called the father "weak, foolish and selfish."
Gombiner said in an opening statement in Manhattan federal court that the son, a 35-year-old Yale-educated former athlete who was valedictorian of his high school class in North Merrick on Long Island, was making nearly $1 million annually as a banker before his arrest on insider trading charges.
Gombiner spoke after Assistant U.S. Attorney Brooke Cucinella said the government will prove Sean Stewart gave insider tips to his father in advance of five separate mergers and acquisitions of healthcare companies over four years while he worked at JPMorgan Chase & Co. and Perella Weinberg Partners LP.
The prosecutor said the father got a friend, Richard Cunniffe, to make the securities trades and they were supposed to share profits, though Robert Stewart only got $150,000 of the $1.1 million in illegal earnings.
She said the father used some of the profits to cover some of his son's 2011 wedding costs, including the hiring of a photographer and the cost of a rehearsal dinner. Gombiner labeled those claims nonsense.
Cucinella said the evidence would include a taped conversation between Cunniffe and the elder Stewart in which the father recalls that this son served up tips to him "on a silver platter."
The effort to show Sean Stewart received something in return for sharing secrets was an important part of the case after the 2nd U.S. Circuit Court of Appeals in December 2014 changed the landscape of insider trading law by directing prosecutors 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.
Gombiner said the father — "a dreamer, a big talker and a terrible businessman" — was broke and desperate when he took advantage of his close relationship with his son to use information that was shared in confidence.
"He did not expect his father would betray his love and trust and confidence," Gombiner said.
The father, Robert Stewart, 61, has pleaded guilty and was sentenced to a year of home detention. Cunniffe, 61, has pleaded guilty to charges and was expected to testify for the government against Sean Stewart in a bid for leniency at sentencing.
Gombiner called Cunniffe "a hustler, a man Sean Stewart has never met or spoken to."
After the jury left for the day, U.S. District Judge Laura Taylor Swain listened as Robert Stewart invoked his Fifth Amendment right not to incriminate himself in response to defense efforts to compel his testimony.
She said forcing his testimony could cause him adverse consequences.
Defense attorney Martin Cohen objected to the ruling, saying the defense now has no way to confront the father about his taped statements or otherwise attack his credibility.