June 11, 2015 / 10:18 PM / 4 years ago

Investment banker to cooperate in insider trading case -court papers

NEW YORK, June 11 (Reuters) - A managing director at a boutique investment bank has agreed to cooperate with prosecutors at an insider trading case involving a former Perella Weinberg Partners employee accused of passing stock tips to his father, according to court records.

Richard Cunniffe, who worked at Chatsworth Securities LLC in Greenwich, Connecticut, secretly pleaded guilty on May 12 in Manhattan federal court to charges including securities fraud, records show.

Prosecutors say he has been cooperating since March 12 in an investigation that led to charges last month against Sean Stewart, a former managing director at investment bank Perella Weinberg Partners, and his father, Robert Stewart.

Prosecutors had already revealed they secured a guilty plea from a cooperating witness who engaged in recorded conversations with Robert Stewart about the alleged scheme.

But at the time charges were unveiled May 14, Cunniffe’s name remained secret. Asked on Thursday, representatives for Manhattan U.S. Attorney Preet Bharara confirmed his identity.

Kevin Kearon, Cunniffe’s lawyer, confirmed the guilty plea occurred but declined further comment.

Prosecutors say Sean Stewart routinely tipped his father about mergers being worked on at Perella and JPMorgan Chase & Co , where he worked until 2011.

At JPMorgan, those mergers included INC Research Holdings Inc’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 Cunniffe make trades in exchange for some of the profits.

In total, the scheme enabled Robert Stewart and Cunniffe to make $1.16 million, according to a criminal complaint.

Lawyers for the Stewarts declined comment on Thursday.

A related lawsuit by the U.S. Securities and Exchange Commission described Cunniffe as having spent almost his entire career in the securities industry and having been a close friend of Robert Stewart.

Records maintained by Financial Industry Regulatory Authority list a single person by Cunniffe’s name, who had the same licenses as the individual the SEC described and was registered until April with Chatsworth.

A Chatsworth executive did not respond to a request for comment.

The cases in U.S. District Court, Southern District of New York, are U.S. v. Stewart, 15-mj-1634, and U.S. v. Cunniffe, No. 15-cr-287. (Reporting by Nate Raymond in New York; Editing by David Gregorio)

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