In Retrospect, L.I. Father Probably Would *Not* Have Recounted Story About Son Chiding Him For Failing To Trade On Inside Tip, In Presence Of Guy Wearing A Wire

Bob Stewart may or may not also regret all the illegal trades he *did* make.
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Everyone say 'insider trading' on 3! (Getty Images)

Say 'insider trading' on 3! (Getty Images)

Next Monday, ex-Perella Weinberg employee Sean Stewart will go on trial on insider trading charges, and regardless of the outcome, the whole thing will make a pretty, pretty, pretty awkward story for the Summer/Fall edition of the Stewart Family Newsletter.

According to prosecutors, Sean tipped his father to five health-care mergers from 2011 to 2014 while he worked as an investment banker at JPMorgan Chase & Co. and Perella Weinberg. In exchange, they say, Bob paid $10,000 for a photographer at Sean’s wedding and gave his son an additional $15,000. The father shared tips with a friend, Dick Cunniffe, and the two reaped more than $1 million trading on the leaks, prosecutors said. Of that amount, Bob got about $100,000, his lawyers said. Cunniffe was caught, pleaded guilty and agreed to cooperate with the Federal Bureau of Investigation in a bid for leniency. Cunniffe began secretly recording the older Stewart. In one conversation, at Andrew’s Coffee Shop in midtown Manhattan, Bob allegedly told Cunniffe that his son had scolded him for failing to trade on a tip. “I can’t believe it,” Bob quoted Sean as saying, according to prosecutors. “I handed you this on a silver platter and you didn’t invest.” Bob Stewart pleaded guilty just three months after his arrest.

Way harsh, son! But according to the younger Stewart's court-appointed lawyers, Stewart the Elder stuck his nose where it didn't belong unbeknownst to Sean.

It’s unclear whether prosecutors will focus on the family relationship. But Sean might do so as part of his claim that his father learned what he was doing at work and then used the information to trade, according to the person, who declined to publicly discuss details of the case...The defense may highlight another recorded meeting between Cunniffe and the older Stewart in which Bob said he never told Sean he had used the information.

Dad’s Tape Could Jail Banker Son Accused of Offering Tips [Bloomberg]

Related

David Slaine, Government's Undercover "Tip-Mining Machine," Apparently Under The Impression Insider Trading Works On A 3-Strike Basis

Remember David Slaine? For those who need a refresher, he is the former Morgan Stanley managing director and ex-Galleon trader who began working as an FBI informant in 2007 and who was outed for doing so by the Wall Street Journal in January 2010. At the time, we learned a few notable things about Slaine, some of them germane to his role in helping the government go after people trading on material non-public information, others special in their own way, like: 1. He takes french fries, and perhaps all snacks, very seriously. In 1993, Slaine triggered a fist-fight with a colleague on the trading floor after needling him because he wouldn’t share his french fries. Others broke up the fight. 2. He doesn't wait for people to towel off and get dressed before knocking their teeth out. One morning early in 2001, before trading began, Gary Rosenbach, then was the No. 2 executive under Mr. Rajaratnam, and Slaine were in a steam room together after exercising at an Equinox Fitness Club. Mr. Rosenbach was pressuring Mr. Slaine to improve his performance. As Mr. Rosenbach lay on his back on a bench, Mr. Slaine punched him, giving him a black eye and ending their friendship. 3. Humans aren't the only ones often asked "you want a piece of me?" He once smashed a computer keyboard in a fit of rage, says a person familiar with the incident. 4. While working on Wall Street, he eschewed the traditional channels of employee recruitment (Wharton, etc), preferring instead to pick up fresh analysts at the club. While at Morgan Stanley, he met [Craig] Drimal, then a nightclub bouncer at the Vertical Club in Manhattan. The two quickly formed a friendship based on a shared passion for weight lifting and their mutual ability to bench-press 400 pounds...Shortly after arriving at Galleon, Mr. Slaine persuaded Galleon officials to give a position to Mr. Drimal, who then was working as a bouncer at the Roxy nightclub in Manhattan. 5. Being a person with whom he "formed a friendship based on a shared passion for weight lifting and [a] mutual ability to bench-press 400 pounds," possibly the greatest line written about anyone who's ever worked on Wall Street and which which cannot be said enough, means little in the long run if he knows you've been playing it fast and loose with securites laws. In July 2007, the FBI showed up at Mr. Slaine's door on W. 57th Street in Manhattan and confronted him. Mr. Slaine agreed to help the government. At the time, federal prosecutors in Manhattan were trying to make headway on another investigation that eventually led to the charges involving Galleon. They asked Mr. Slaine who he knew that might be participating in insider trading. Mr. Slaine's answer: his friend Mr. Drimal, according to people familiar with the matter. In September 2007, Mr. Slaine—identified in the complaint as CS-1—tried out his body wire for the first time, meeting Mr. Drimal in New York. During the meeting, Mr. Drimal gave Mr. Slaine a piece of paper with four stock symbols, according to the complaint. He told Mr. Slaine the four companies were all acquisition targets. At the meeting's end, Mr. Drimal told Mr. Slaine to destroy the list. He warned him to "be careful" in trading the securities because no news of the takeovers had surfaced publicly...After the meeting, Mr. Slaine went to a nearby hotel where an FBI agent was waiting, says a person familiar with the matter. The pair went to a room where Mr. Slaine removed the wire. Anyway, Bloomberg recently checked in to see what Slaine's been up to these last couple years and other than his "multi-year experience" with the FBI being "tremendously traumatic," he seems to be doing pretty well.

Convicted Insider Trader Garrett Bauer Hoping College Kids Will Help Him Get Off

Remember Garrett Bauer? For those who need a refresher, GB was a trader (who "mostly worked from home") who was charged last year for running a decades-long insider trading scam with an M&A attorney, Matthew Kluger, that involved stealing information from several law firms. (In April 2011, 20 FBI agents knocked on Bauer's door to arrest him which, while terrifying, didn't come as much of a shock-- the duo had recently become suspicious that the authorities were onto them and, naturally, went about destroying evidence, a process Bauer recounted to a cooperating witness in a conversation he didn't realize was being recorded, telling the CC: "My heart was beating ten thousand miles an hour. I went right up to my apartment and I broke the phone in half and went to McDonald's and put it in two different garabage cans. And someone was watching me. I thought it was an FBI agent. And I asked him, 'Do you know me? You look familiar.' And, like, I was so panicked. I literally didn't sleep that entire night...I can't sleep. I am waiting for the FBI to ride into my apartment. I am on edge all night thinking they are coming in.") Anyway, Bauer ultimately pleaded guilty and is set to be sentenced today. Though he could receive up to 11 years in the big house, a judge will be taking into consideration letters "expressing support or urging leniency" sent on Bauer's behalf, some of which were written by fans he's gained working the college lecture circuit the past few months, explaining to undergrads why they don't want to follow in his footsteps (hint: it involves sleeping on bunk-beds). “I’m here hoping you won’t commit the same crime I committed, insider trading,” Bauer told the students at NYU’s Stern School of Business in February. “I feel remorse. That’s why I’m here. It’s my way of trying to apologize to everyone for what I’ve done and try to make amends.” Bauer said he hopes that his “scared straight” message, delivered in 147 speeches since last fall at business schools, law schools, churches and synagogues, will move the judge to grant him leniency. Sentencing judges can consider whether a defendant has accepted responsibility and shown remorse for his acts. “I’m not blind anymore,” Bauer said in an interview. “I see how wrong it was, how unfair it was to everybody else that’s trading. You get away with it once, and then you think you can get away with it every time. I almost never considered the question of getting caught. It was more a question of let’s figure out a way to make money and not lose money.” Bauer spoke several times a week in person or via Skype at schools including Harvard University, Yale University, the University of California at Berkeley, the University of Texas, the University of Michigan and Duke University. He booked his own speeches, sometimes called “Confessions of an Inside Trader.” Bauer gave the same basic narrative in two appearances observed at NYU, as well as at Cardozo Law School in New York, Drexel University in Philadelphia and a Rutgers University class in Jersey City, New Jersey. Bauer, lean at 5-foot-11 and 145 pounds, favors button-down shirts and khaki pants. He speaks rapidly in a nasal voice, lacing his account with jokes...In every talk to students, Bauer discussed how 20 FBI agents came to his apartment to arrest him and how they played the tapes for him, as well as his time in the Hudson County Jail. He tried hard to show no emotion to violent criminals. “Saying it’s a scary place kind of understates it,” he said. “It’s the scariest place on earth.” At least one professor believes Bauer's talk scarred his students for life, which should count for something. And according to Sameen Singh, a recent Stern grad who will soon start a job at Morgan Stanley, U.S. District Judge Katharine Hayden ought to go easy on the guy, who is just another bro. “I was impressed by how human he was and how his friendships and relationships played a role in his crimes. My friends were quite taken aback by how similar he was to them. He came from humble beginnings, and he’s not a deviant mastermind criminal. He’s just a regular guy.” Prison-Bound Bauer Reprises ‘Confessions Of An Inside Trader’ [Bloomberg]