(Bloomberg) -- A former Perella Weinberg Partners LP banker convicted of tipping his father to five health-care mergers may be the latest insider-trader to win his freedom, as another case threatens to fall apart on appeal.
In an unusual request that signals the court may have decided to overturn all or part of Sean Stewart’s conviction, a federal appeals panel in Manhattan invited him on Tuesday to file a request to be released from prison while it considers his appeal.
Stewart, 37, is serving a three-year sentence at a federal prison in northeastern Pennsylvania. Jurors convicted him in August 2016 of nine counts, finding he passed tips to his father, Bob Stewart, that he learned from his work at Perella Weinberg and previously at JPMorgan Chase & Co.
The three-judge panel heard arguments in February and then requested additional legal briefs. Stewart’s lawyer argued that the trial was unfair because the judge improperly admitted evidence that Bob Stewart told a friend that his son had once scolded him for failing to trade on a tip. “I handed you this on a silver platter, and you didn’t invest in this,” Sean told Bob, according to a witness who cooperated with the government in hopes of leniency in sentencing.
Stewart also argued he should have been allowed to tell jurors about statements his father made to FBI agents undercutting the "silver platter" statement and claiming that Sean didn’t know he was trading on confidential information.
Sean Stewart testified in his own defense, saying his father had betrayed him by trading on information he picked up in family discussions about his work. He told jurors he frequently talked about work, including the names of clients, in front of his wife and family, but that he didn’t know his father was trading on the information. Bob Stewart, who made $150,000 on the trades over four years, pleaded guilty and was sentenced to probation.
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The appeals court’s one-page order directs his lawyers to address whether he “is not likely to flee or pose a danger to the safety of any other person or the community if released” pending their ruling on the appeal.
Federal prosecutors in New York suffered several setbacks in a years-long crackdown that led to dozens of convictions. In 2014, the same appeals court made it more difficult for the government to prove insider trading in some instances, in a ruling that forced prosecutors under then-U.S. Attorney Preet Bharara to drop 14 cases.
Stewart could be released as early as next month, after the appeals court reviews legal briefs from his lawyer and prosecutors. Stewart’s attorney, Alexandra Shapiro, didn’t return calls or emails after business hours on Tuesday. A spokesman for the current U.S. Attorney, Geoffrey Berman, declined to comment.
The case is U.S. v. Stewart, 15-cr-287, U.S. District Court, Southern District of New York (Manhattan).
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