NEW YORK, Aug 12 (Reuters) - The father of a former investment banker at Perella Weinberg Partners pleaded guilty on Wednesday to a charge that he illegally traded securities ahead of healthcare mergers based on information supplied by his son.
Robert Stewart, 60, pleaded guilty in Manhattan federal court to a conspiracy count, three months after he was arrested for engaging in an insider trading scheme that enabled him and an associate to make $1.16 million based on his son’s tips.
“I knew what I was doing was wrong,” Stewart said, according to a transcript.
Under a plea deal, Stewart agreed not to appeal any prison term below 37 months when he is sentenced Nov. 12. The deal did not call for him to cooperate in the case against his son, Sean Stewart.
A lawyer for Robert Stewart declined comment. Tai Park, Sean Stewart’s lawyer, said his client was “looking forward to trial and being fully vindicated.”
The case was the latest in a string of insider trading prosecutions under Manhattan U.S. Attorney Preet Bharara, whose office has since 2009 charged 96 people.
The case is one of the first criminal prosecutions the office has pursued after a federal appeals court in December issued a ruling that restricted their ability to pursue insider trading cases.
Prosecutors said that Sean Stewart, 34, 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, an accountant, traded on the tips and, after a regulator began inquiring about Kinetic Concepts trading, arranged to have a business associate, Richard Cunniffe, make trades for a cut of what became $1.16 million in profits.
Cunniffe, an investment banker at Chatsworth Securities LLC, ultimately agreed to cooperate with authorities, secretly pleading guilty in March before the Stewarts were charged and participating before that in recorded conversations of Robert Stewart.
In one recording, authorities say, Robert Stewart told Cunniffe that his son once chastised him for failing to use a tip, saying, “I can’t believe I handed you this on a silver platter and you didn’t invest in it.”
The case is U.S. v. Cunniffe, U.S. District Court, Southern District of New York, No. 15-cr-287. (Reporting by Nate Raymond in New York; Editing by Diane Craft)