A former managing director at Perella Weinberg Partners LP was convicted Wednesday of insider trading on allegations he tipped his father on pending health-care deals.
Prosecutors alleged that Sean Stewart began tipping his father as early as 2011, when he was vice president in the health-care investment banking group at J.P. Morgan Chase & Co.
Mr. Stewart passed on information about several health-care mergers, prosecutors said, and continued doing so after he moved to Perella in October 2011. They said he thought his father was in financial trouble and provided the tips to help him.
His father, Robert Stewart, and another involved in the scheme, Richard Cunniffe, made more than $1 million in illegal profits, prosecutors said.
Mr. Stewart, 35 years old, testified during the trial and claimed he didn't intend to give tips to his father, who he said betrayed him and traded on information gleaned from casual conversations about Mr. Stewart's work.
A jury in Manhattan federal court convicted Mr. Stewart on nine counts of securities fraud and other charges after six days of deliberations.
His father previously had pleaded guilty, is cooperating with the government and was sentenced to four years of probation.
Two other cooperating witnesses who testified during the trial said they had received stock tips from the elder Mr. Stewart and used them to purchase stock options. One of the men, Mr. Cunniffe, recorded conversations between himself and Robert Stewart. During one of the recorded meetings played during the trial, Mr. Stewart said his son once chastised him for failing to trade on a tip, saying, "I can't believe I handed you this on a silver platter and you didn't invest in it."
Mr. Cunniffe also has pleaded guilty and is seeking a less-stringent sentence in exchange for his cooperation.
Perella Weinberg previously called Mr. Stewart's behavior rogue and said the "charges against an employee of the firm alleging insider trading activity are unprecedented in our history." A representative at J.P. Morgan declined to comment.
The verdict is a victory for the Manhattan U.S. Attorney's office after a 2014 appeals court insider trading ruling made it more difficult for prosecutors to prove insider-trading cases.
The 2014 appeals-court decision said prosecutors had been too aggressive in their interpretation of insider-trading law and that they must prove traders knew that the person who provided an inside tip gained some sort of reward for doing so. The court also said the reward had to be tangible, and more than just career advice or friendship, as prosecutors had alleged in previous cases. Some observers predicted the ruling would slow insider-trading prosecutions.
In Mr. Stewart's case, prosecutors said there was a benefit between father and son, alleging Mr. Stewart had profited from his father's trades because his father paid more than $10,000 for his wedding photographer.
Mr. Stewart's sentence will be determined by U.S. District Judge Laura Swain, who presided over the trial. He could face years in prison.
Corrections & Amplifications: Robert Stewart and Richard Cunniffe made more than $1 million in illegal profits in an insider-trading scheme, prosecutors said. An earlier version of this article incorrectly stated that prosecutors said Mr. Stewart made more than $1 million in illegal profits. (Aug. 17, 2016)
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