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Perella banker accused of insider trading with father

A senior banker at boutique investment firm Perella Weinberg was accused of helping his father make more than $1.1m through insider trading related to five healthcare deals, according to an unsealed indictment.

Sean Stewart, a 34-year-old managing director at New York-based Perella and a former vice-president at JPMorgan Chase, was taken into custody on Thursday, according to the US Attorney's office in Manhattan.

He is accused of passing stock tips he gained from his work at the two banks, which were advising on the healthcare deals, to his father, Robert Stewart, from 2011 to 2014. His father was also arrested on Thursday.

The Securities and Exchange Commission also filed related civil charges against them.

The younger Stewart allegedly first began tipping his father in 2011 when he worked at JPMorgan, according to the indictment. The first deal involved the $232m sale of Kendle International to INC Research, from which the elder Stewart made $7,900.

Sean Stewart also passed on information about the sale of Kinetic Concepts to Apax Partners ahead of the deal announcement in July 2011, according to prosecutors. At that time, Robert Stewart also recruited a trading partner who later became a co-operating witness for authorities.

Robert Stewart allegedly asked for help from the unnamed witness in making trades because he was too close to his son and their relationship could raise suspicions, according to the complaint.

Sean Stewart left JPMorgan in October 2011 and began working at Perella, where he also worked on healthcare deals. From 2012 to 2014, Mr Stewart allegedly gave stock tips to his father ahead of deal announcements for the acquisition of Gen-Probe by Hologic, Linde's purchase of Lincare Holdings and the sale of CareFusion Corp to Becton, Dickinson & Co.

"In one instance, the son's tip to his father became a gift to himself when his father kicked back some of the proceeds of the insider trading to pay for his son's wedding," said Preet Bharara, the US Attorney in Manhattan.

Perella said in a statement that the firm has suspended Mr Stewart's employment pending the outcome of the government's investigation. The firm is also co-operating with authorities.

"Today's charges against an employee of the firm alleging insider trading activity are unprecedented in our history," Perella said. "The described rogue behaviour, if true, violates not just the law, but our principles, our culture and the strict policies and procedures we have in place to protect our clients. Client confidentiality is of the utmost importance to Perella Weinberg Partners, and we continually reinforce that principle to all of our employees."

JPMorgan declined to comment.

A lawyer for Sean Stewart declined to comment. An attorney for Robert Stewart did not respond to a request for comment.

Robert Stewart is accused of trying to conceal the alleged wrongdoing by sometimes using coded golf terminology in emails. For example, in one email Mr Stewart said he "saw local story about high cost of golf reservations since a foreign company purchased all - even more expensive than imagined."

Last year, a former senior banker at Evercore Partners was sentenced to 2 ½ years in prison for insider trading charges that also helped his father and a former mistress.

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