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CORRECTED-UPDATE 3-U.S. charges Perella Weinberg banker, father for insider trading
May 14, 2015 / 3:46 PM / 3 years ago

CORRECTED-UPDATE 3-U.S. charges Perella Weinberg banker, father for insider trading

(Corrects name of Spiral Toys CEO Mark Meyers in paragraph 10)

By Nate Raymond

NEW YORK, May 14 (Reuters) - U.S. authorities on Thursday brought criminal charges against an investment banker at Perella Weinberg Partners and his father for allegedly engaging in insider trading ahead of a series of healthcare mergers.

Sean Stewart, 34, routinely tipped his father about mergers being worked on at Perella and JPMorgan Chase & Co, where he worked until 2011, according to a complaint filed in Manhattan federal court.

The tips enabled Robert Stewart, 60, and a friend to make $1.16 million, the complaint said.

Sean Stewart surrendered to authorities in Wisconsin on Thursday, Manhattan U.S. Attorney Preet Bharara’s office said.

Robert Stewart, an accountant and chief financial officer of mobile applications company Spiral Toys Inc, was arrested in Manhattan and later released on a $500,000 bond.

The U.S. Securities and Exchange Commission separately filed civil charges against the Stewarts, whose lawyers either declined comment or did not respond to requests for comment.

The case marked the latest in a string of insider prosecutions under Bharara since 2009 that have resulted in convictions of more than 80 people.

Authorities did not identify Perella Weinberg or JPMorgan, but their identities were ascertainable from broker records.

Perella Weinberg in a statement called the charges “unprecedented in our history” and said it suspended Sean Stewart, a managing director. JPMorgan declined comment.

Spiral Toys Chief Executive Officer Mark Meyers said the company was investigating how to respond to the charges against Robert Stewart, “a great employee.”

Authorities said Sean Stewart routinely tipped his father about mergers the banks worked on in exchange for benefits including $10,000 for his 2011 wedding.

At JPMorgan, those mergers included INC Research’s 2011 acquisition of Kendle International Inc and Apax Partners’ buyout that year of Kinetic Concepts Inc.

At Perella Weinberg, the deals included Hologic Inc’s 2012 acquisition of Gen-Probe Inc, Linde AG’s purchase of Lincare Holdings Inc that year, and Becton, Dickinson & Co’s deal for CareFusion Corp in October.

Authorities said Robert Stewart traded on the tips and, after a regulator began inquiring into Kinetic Concepts trading, arranged to have a friend make trades in exchange for some of the profits.

The unidentified friend was a business associate who worked in the securities industry who pleaded guilty Tuesday under a cooperation agreement, court documents state.

The Stewarts face nine counts including conspiracy to commit securities fraud, conspiracy to commit wire fraud, securities fraud and securities fraud in connection with a tender offer.

The cases in U.S. District Court, Southern District of New York, are U.S. v. Stewart, No. 15-mj-1634, and Securities and Exchange Commission v. Stewart, No. 15-cv-03719. (Editing by Chizu Nomiyama, Ted Botha, Meredith Mazzilli, Bernard Orr and Diane Craft)

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