Sean Stewart, the Long Island-bred financier whose gilded life’s journey led him to Yale and two top investment banks, now faces a possible prison term after a Manhattan federal jury on Wednesday convicted him of insider trading for passing tips on mergers to his father.
Jurors on their sixth day of deliberations rejected the defense of Stewart, 35, who testified that his dad, North Merrick accountant Robert Stewart, betrayed him by taking advantage of casual father-son talks to make nearly $1 million in trades with an associate.
Sean Stewart and his mother Claudia, who attended every day of the trial and appeared as a witness for her son, looked at each other as the verdict was read but made no obvious show of emotion and later declined to comment.
Most members of the jury didn’t speak to reporters, but juror Carmela Raiti said the six-day deliberation reflected disagreements that “took a while” to resolve in a case filled with conflicting evidence and emotional crosscurrents.
“I would think it’s fair to say this is a family tragedy,” she said. “Nothing we do in life is isolated from those we know and love.”
The verdict followed a two-week trial on charges that Stewart, of New York City, a former Kellenberg High School valedictorian raised in North Merrick, passed along tips on five health care mergers he learned about while working at JPMorgan Chase & Co. and Perella Weinberg Partners.
Robert Stewart, 61, pleaded guilty, but did not testify at trial. His associate Richard Cunniffe, whose account was used for most of the trading, also pleaded guilty and cooperated with prosecutors.
It was the first insider trading case tried by Manhattan U.S. Attorney Preet Bharara’s office since a 2014 appellate ruling that raised the government’s burden of proof to show a benefit to the person providing tips. Prosecutors said Robert Stewart paid wedding costs for Sean from trading profits.
“Insider trading rigs the securities markets in favor of cheaters, and we will continue to investigate and prosecute this crime aggressively,” Bharara said after the verdict.
The key evidence at the trial was a meeting after the first trades in which JPMorgan officials told Sean that his father’s name had shown up on a regulatory list of people trading before a merger. Sean denied ever having mentioned the merger to his father when he was confronted.
During his testimony, Sean admitted that was a lie. He told jurors that he didn’t want to get himself or his father in trouble, but said that after confronting his dad he innocently resumed sharing information because he assumed Robert had learned his lesson and wouldn’t trade again.
Jurors apparently didn’t buy the explanation, convicting Stewart on all nine counts of conspiracy and securities fraud. He will face a maximum prison term of 165 years at his Feb. 17 sentencing, but a much shorter sentence is likely. Robert Stewart was given one year of home detention.
Sean Stewart’s lawyers said they would appeal, complaining that U.S. District Judge Laura Swain let jurors hear a secret recording in which Robert Stewart said his son knew about his trades, but excluded post-arrest statements in which Robert said Sean didn’t know.