The father of a former JPMorgan (JPM) banker has pleaded guilty to taking part in an insider trading ring with his son. Robert Stewart will forfeit $150,000 and faces five years behind bars.
According to the U.S. Justice Department, Stewart’s son, Sean Stewart, allegedly gave his father tips about upcoming deals, including information about a number of acquisitions and mergers. The older Stewart divulged some of the tips to Richard Cunniffe, who has also pleaded guilty in the conspiracy. Cunniffe is now a cooperating witness.
The DOJ said that in early 2011, Sean, who was a JPMorgan Vice President in the Healthcare Investment Banking Group, began tipping his dad about numerous deals. The first one was about the acquisition of Kendle International Inc.—a deal that he worked on. Robert made nearly $8,000 by buying Kendle stock. The second deal involved the acquisition of Kinetic Concepts Inc. After Sean went to go work at Perella Weinberg, he allegedly continued to provide insider tips to his dad.
The government says that the conspirators ended up making over $1 million on the trades. Cuniffee and the elder Stewart used golf-related lingo to conceal their scam as they discussed the illegal trades over email or on the phone.
Sean surrendered to authorities earlier this year. The criminal charges against him are pending.
In other insider trading news, federal authorities are investigating former Dean Foods Co. chairman Tom C. Davis as part of their investigation. Davis abruptly resigned from his position at Dean Foods last week.
Bloomberg says that according to a source, a SEC, FBI, and New York prosecutors are looking at Dean Foods trades made by professional golfer Phil Mickelson and Las Vegas Gambler William Walters. The two men have not been accused of wrongdoing.
While insider trading may appear to be a victimless crime, any kind of trading that preferences certain people creates an uneven playing field where the exclusive few make gains while everyone else may be subject to losses. It is important that everyone that trades in securities be given access to the same information.
Ex-JPMorgan banker’s dad who used golf-lingo to disguise insider trading pleads guilty, Business Insider, August 12, 2015
Father Of Former Investment Bank Managing Director Pleads Guilty To Insider Trading Conspiracy, US Department of Justice, August 12, 2015