Saturday, July 30, 2016

Insider trading by ex-banker's father becomes focus in U.S. trial

Insider trading by ex-banker's father becomes focus in U.S. trial
Artwork by Aggie Kenny

NEW YORK, July 27 (Reuters) - The relationship between a former Wall Street investment banker charged for insider trading and his father, who traded on information about mergers he learned from him, took center stage at the start of the son's trial on Wednesday.

US v. Sean Stewart, Attorney  Sarah Eddy McCallum questions witness, Special Agent Callahan as defendant Sean Stewart (seated 2nd from right), looks on. The presiding judge is Hon. Laura Taylor Swain. 7/28/16
Assistant U.S. attorney Sarah McCallum, focused her presentation on showing that Stewart knew and intended that his father would trade on the confidential information. Stewart lied to JPMorgan, Cucinella said, when presented with a list of individuals who suspiciously bought stock in 2011. The list included Stewart's father, but he did not fess up to recognizing any names on the list.
Newman is unlikely to come up directly during the trial and its holding applies more to those trading on inside information than those accused of providing it. The Second Circuit ruled that to sustain a conviction prosecutors must prove that defendants charged with trading on inside information knew the insiders received a "consequential" personal benefit for disclosing the information.
Even so its impact looms large in the background. The U.S. Supreme Court is expected this fall to consider the benefit-to-the-tipper issue in United States v. Salman, an insider-trading case from the U.S. Court of Appeals for the Ninth Circuit.

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