Sean Stewart's insider trading conviction reversed in appeals court

A Manhattan federal appeals court on Monday reversed the insider trading conviction of Sean Stewart, the Long Island-raised investment banker accused of illegally passing tips to his North Merrick father, Robert.

Stewart, 37, of Manhattan, was sentenced to 3 years in prison for passing on information that his father and a co-conspirator used to allegedly make over $1 million in trading, but was released in June after serving a year, apparently in anticipation of the reversal.

At trial, Stewart claimed he didn’t know his father was trading on tips, and the Second Circuit Court of Appeals ruled the defense was improperly prevented from introducing evidence casting doubt on Robert Stewart’s statement to an informant indicating his son did know.

The father, on tape, said Sean had complained that Robert was getting tips on a “silver platter” and wasn’t trading enough. Later, in an interview with the FBI, Robert Stewart — who pleaded guilty but served no jail time — gave a different version in which his son was drinking and said "if" Robert was trading he'd make money.

"Robert need not have explicitly denied the 'silver platter' statement to render his discussions with the FBI admissible," the Second Circuit said in a 2-1 decision.

Although one judge — U.S. District Judge Richard Berman — said the error was harmless because the case was so strong, Appeals Court Judges Robert Katzman and Pierre Leval said the "silver platter" statement was a key piece of evidence, and jurors took five days of deliberation to resolve an impasse.

Stewart, a former Kellenberg High School valedictorian and Yale graduate, was a highly paid banker specializing in health care deals at JPMorgan Chase and Perella Weinberg Partners. He was convicted in 2016 of passing five tips to his father between 2011 and 2015.

A spokesman for U.S. Attorney Geoffrey Berman declined to comment on whether the government will retry the case. Stewart's lawyer, Alexandra Shapiro, said she was "pleased" with the ruling because the excluded evidence "was critical to Mr. Stewart's defense."