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Insider Trading Scandal Rocks Manhattan Financier
Sean Stewart, a former managing director at an investment advisory firm headquartered in Manhattan, was sentenced to 36 months in prison by U.S. District Judge Laura Taylor Swain for tipping his father with inside information about five health care company mergers and acquisitions before they were publicly announced.
According to the allegations, in early 2011, Stewart began tipping his father, Robert Stewart, with material nonpublic information about upcoming mergers and acquisitions. The first deal involved the acquisition of Kendle International Inc. by INC Research, LLC, which was announced publicly on May 4, 2011. Stewart worked on the deal, representing Kendle.
Robert Stewart made about $7,900 in profits on purchases of Kendle stock executed in February and March of 2011. When questioned by the Securities and Exchange Commission about his Kendle trades in May 2013, Robert Stewart reported that he used the proceeds of those trades to pay expenses related to Stewart’s June 2011 wedding.
The second deal about which Stewart tipped his father was the acquisition of Kinetic Concepts, Inc. by Apax Partners, announced on July 13, 2011. Although Robert Stewart purchased some stock in KCI based on Stewart’s tip, he sold that stock before the acquisition was announced.
Manhattan U.S. Attorney Preet Bharara said, ‘As proven at trial, Sean Stewart used his position as an investment banker to feed confidential inside information about clients to his father so that he could profit illegally from well-timed trades.’ This case is a victory for all who believe in a fair securities market.’
Stewart was convicted after a jury trial that ended on August 17, 2016. His scheme was uncovered and he was held accountable by a jury and sentenced to three years in federal prison.
Key Facts
- State: New York
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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