- Former investment banker charged with passing tips to father
- Richard Cunniffe testifies against son of former friend
The government’s star witness in the insider-trading trial of former Perella Weinberg Partners investment banker Sean Stewart said he traded on four tips he got from Sean’s father Bob Stewart.
Bob “told me that his son Sean had given him the information," Richard Cunniffe told jurors, backing prosecutors’ claims that the former banker leaked information on pending mergers to his father.
Cunniffe, with gray hair and a mustache and wearing silver-rimmed glasses, testified Monday after having pleaded guilty in the case. He’s cooperating with prosecutors in hopes of avoiding prison. Cunniffe took the stand in Manhattan federal court on what he told jurors was his 62nd birthday.
Sean Stewart, who had also worked at JPMorgan Chase & Co., says he never met Cunniffe and that he had no idea his father and others were trading on information that his dad gleaned from informal chats with him. Sean has denied all wrongdoing in the case.
Bob Stewart pleaded guilty and was sentenced to probation. Sean tried to force his father to testify as a defense witness but Bob refused, invoking his Fifth Amendment right not to incriminate himself. U.S. District Judge Laura Taylor Swain, who’s overseeing the trial, agreed with the older Stewart and won’t require him to take the stand.
The government claims Sean Stewart passed his father tips on five healthcare company mergers, from February 2011 to April 2015. At first, Bob allegedly traded on the tips himself. Then, after the SEC questioned both Stewarts about one of the trades, Bob began passing the tips to Cunniffe in exchange for kickbacks.
"I asked him why he didn’t trade in his own account and he said he was too close to the source," Cunniffe said.
Cunniffe said he met Bob at Titan Development Properties, a Bayside, New York company where he worked after being fired from a previous job. Titan was working on mall projects that were to focus on home design and home improvement, he said. Outside Titan, he and Bob tried to line up financing for a hydroelectric project in Vietnam as they sought to find other sources of income, Cunniffe said.
"Sometimes Bob and I would go months and months and months without getting paid," he said.
Cunniffe told jurors he now works at Home Depot.
In cooperating with the government, Cunniffe met Bob at lunchtime on March 24, 2015, in a Manhattan diner, passing $2,500 to his friend -- allegedly his share from their illegal trading.
Unknown to Bob, the money was provided to Cunniffe by the FBI and four agents were watching and recording the conversation.
A key part of the government’s case is a statement allegedly made by Bob to Cunniffe during their conversation. Prosecutors claim Bob told his friend that his son had once told him, referring to an illegal tip: “I can’t believe it. I handed you this on a silver platter and you didn’t invest in this.”
Sean’s trial began with opening statements July 27. Stewart is expected to begin presenting his defense Wednesday.
The case is U.S. v. Stewart, 15-cr-00287, U.S. District Court, Southern District of New York (Manhattan).