Perella Weinberg’s Stewart to Testify in Insider Prosecutionby
Strategy allows Stewart to tell his side but presents risks
Stewart is charged with passing merger tips to his father
Former Perella Weinberg Partners LP investment banker Sean Stewart is set to testify in his own defense on charges he passed inside tips to his father in a risky move that may give prosecutors a chance to undermine his credibility.
Stewart, 35, told a judge overseeing his trial that he will take the stand Thursday, at the start of his defense against charges that he told his father about five healthcare industry mergers.
The decision was announced Wednesday, a day after U.S. District Judge Laura Taylor Swain ruled against Stewart’s attempt to force his father to testify. Bob Stewart resisted a subpoena from his son’s lawyers, pleading his Fifth Amendment right against self-incrimination.
Stewart’s decision allows him to present his side to jurors, but can be "incredibly risky" for the defense, according to Anthony Sabino, who teaches law at St. John’s University in New York. It gives prosecutors the opportunity to cross-examine a defendant and try to convince jurors that he’s a liar, he said.
Most defendants in insider-trading trials in recent years, including Galleon Group LLC co-founder Raj Rajaratnam and former SAC Capital Advisors LP fund manager Mathew Martoma, chose not to take the stand. Both were convicted and are serving prison sentences.
"Even if he tells a good story, will the jury truly believe him?" Sabino asked. "Or will they be even more convinced of his guilt?"
Bob Stewart "betrayed the trust and love and confidence of his son" by trading on information he picked up in informal conversations between the two, Sean’s lawyer told jurors in his opening statement. Sean claimed he had no idea his father and two other men were trading on the tips.
Sean’s lawyers claim Bob Stewart made statements to the FBI after his arrest denying that his son knew about his trading.
The case is U.S. v. Stewart, 15-cr-00287, U.S. District Court, Southern District of New York (Manhattan).