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By Phyllis Diamond
Jan. 21 — Ex-Perella Weinberg Partners LP executive Sean Stewart lost his bid Jan. 19 to dismiss charges he tipped his father to inside information about pending mergers in the health-care sector.
The U.S. District Court for the Southern District of New York rejected Stewart's challenges to the indictment, including that the law of insider trading is unconstitutionally vague.
Stewart has more than enough information to prepare for trial and to “prevent unfair surprise, which is all that the law requires,” Judge Laura Taylor Swain said.
In May 2015, Stewart and his father Robert Stewart were charged civilly and criminally over their alleged involvement in a scheme in which Sean Stewart fed his father nonpublic information about upcoming mergers and acquisitions (94 SLD, 5/15/15). In August, Robert Stewart pleaded guilty to insider-trading conspiracy (156 SLD, 8/13/15).
In moving to dismiss the indictment, Sean Stewart argued that the Second Circuit's Newman decision left the law of insider trading unconstitutionally vague, and that the government's efforts to upset the ruling amounted to an acknowledgment that there was no clear guidance or practical application of the law.
The court disagreeing, calling the defendants' arguments “overblown, unfounded and unavailing.” The U.S. Court of Appeals for the Second Circuit “has soundly rejected the notion” that 1934 Securities Exchange Act Section 10(b) and Rule 10b-5 “have been construed so expansively as to fair to give fair warning of what conduct is prohibited,” the court said.
Sean Stewart was represented by Tai H. Park, Kathleen E. Gardner and Tami Stark, Park Jensen Bennett LLP, New York.
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