Dad’s Tape Could Jail Banker Son Accused of Offering Tipsby
Perella Weinberg’s Stewart faces trial for insider trading
A family tragedy plays out before a federal jury in New York
Bob Stewart was always there for his son -- as a soccer coach and Boy Scout leader, as the proud parent of a Yale graduate and then an investment banker.
Now it may be his own words that send his son to prison.
Sean Stewart, an ex-managing director at Perella Weinberg Partners LP, goes before a jury on July 25 on insider-trading charges. It promises to be a Wall Street trial unlike any other. A key piece of government evidence is a secret recording not of a trader or corporate insider -- but of a father allegedly confiding in a friend that his son slipped him illicit tips.
The case is as much family tragedy as courtroom drama. Bob pleaded guilty to a felony, Sean could be jailed, and Bob’s bond with Sean -- “as a role model, mentor and friend” -- is “irreparably damaged,” as Bob’s lawyers told the judge who sentenced him in May to probation.
“The whole thing has floored me,” the family’s priest, Thomas Gallagher, said in an interview. “I was flabbergasted.”
Yet, in a twist that may require jurors to dissect Stewart family dynamics, Sean may cast blame on his dad as a way to save himself. Sean’s defense likely hinges on convincing jurors that his father exploited their relationship by misusing information he picked up from his son and trading on it without his knowledge, a person familiar with the case said.
When Bob pleaded guilty, he admitted he got confidential information from Sean but didn’t say Sean knew he was using it.
Sean and Bob Stewart declined to comment on the case, their lawyers said. After his arrest, Sean was fired from Perella Weinberg. His first set of attorneys quit when he couldn’t pay them, and he’s now represented by court-appointed lawyers.
According to prosecutors, Sean tipped his father to five health-care mergers from 2011 to 2014 while he worked as an investment banker at JPMorgan Chase & Co. and Perella Weinberg. In exchange, they say, Bob paid $10,000 for a photographer at Sean’s wedding and gave his son an additional $15,000. The father shared tips with a friend, Dick Cunniffe, and the two reaped more than $1 million trading on the leaks, prosecutors said. Of that amount, Bob got about $100,000, his lawyers said.
Cunniffe was caught, pleaded guilty and agreed to cooperate with the Federal Bureau of Investigation in a bid for leniency. Cunniffe began secretly recording the older Stewart. In one conversation, at Andrew’s Coffee Shop in midtown Manhattan, Bob allegedly told Cunniffe that his son had scolded him for failing to trade on a tip.
“I can’t believe it,” Bob quoted Sean as saying, according to prosecutors. “I handed you this on a silver platter and you didn’t invest.”
Bob Stewart pleaded guilty just three months after his arrest. Along with the recordings, prosecutors had e-mails in which the older Stewart and Cunniffe used golf references to conceal their trades.
Andrew Gray, a JPMorgan spokesman, and Jim Margolin, a spokesman for U.S. Attorney Preet Bharara in Manhattan, declined to comment on the case. Kara Findlay, a Perella Weinberg spokeswoman, didn’t immediately respond to a request for comment. The firm previously said the allegations, if true, violate “not just the law but our principles.”
With Sean in court, the government will play his father’s words even if Bob isn’t called as a witness. Prosecutors say the “silver-platter” remark is “devastating” to his defense. The case has also been crushing to the family.
“It tortures him daily to see the devastation he has caused,” Bob’s wife Claudia told the judge who sentenced him. “It is painful to see this once-proud father, husband and neighbor go through the mental anguish Bob is now constantly living.”
Gallagher, who married Bob and Claudia Stewart, said Sean was a “very respectful” boy who grew into an “admirable, upright and competent” man. The Stewarts were a tight-knit family in a suburban Long Island neighborhood of unassuming but well-tended homes. Bob worked as an accountant, chief financial officer and consultant at various companies.
A convert to Catholicism, Bob put his two sons through Catholic school while coaching their soccer and baseball teams and helping with class projects. Sean was a Boy Scout in the troop sponsored by the parish, and Bob, himself an Eagle Scout, managed its finances, his wife and lawyers said in court papers.
The Stewarts stayed close, Gallagher said. Months after Bob and Sean’s arrest last year, they came together for the baptism of Sean’s younger brother’s child. Weeks later, they buried Sean’s grandmother. A message left at the Stewart home wasn’t returned.
It’s unclear whether prosecutors will focus on the family relationship. But Sean might do so as part of his claim that his father learned what he was doing at work and then used the information to trade, according to the person, who declined to publicly discuss details of the case.
Defense lawyers are also taking aim at the 70-minute coffee-shop recording. They point to the lunchtime clattering of plates and chatter of diners, saying many of Bob’s words can’t be deciphered. It’s “a garbled, vague and largely inaudible recording,” they said in court papers, adding that the silver-platter remark is innocent, or at least impossible to interpret.
The defense may highlight another recorded meeting between Cunniffe and the older Stewart in which Bob said he never told Sean he had used the information. Prosecutors say Bob “clammed up” after becoming suspicious that Cunniffe was cooperating.
The $15,000 payment was settling up for a loan, Sean’s lawyers argued. And the wedding photographer? That, they say, is just what a father does for his son.