Source: Reuters
By:
(NEW YORK, NY) — Opening statements are scheduled to begin Monday in the highly-publicized insider trading case against a former Keefe, Bruyette & Woods Inc. chief executive charged with allegedly giving illegal tips to a pornographic actress.
Prosecutors are expected to accuse James McDermott Jr., 48, of Briarcliff Manor, N.Y., of giving inside tips about six banking mergers to his mistress Kathryn Gannon, the X-rated movie star. The trial is being held in Manhattan federal court before U.S. District Judge Kimba Wood.
Although lurid details of the case have been great fodder for tabloids and potential jurors were questioned as whether they would be biased by testimony concerning extramarital affairs, a sanitized version of events will be presented during the trial.
Wood ruled last month that federal prosecutors will not be able to tell the jury that Gannon has a sexually graphic Internet Web site, appears in X-rated films and worked as an exotic dancer and escort. Wood found that the information might distract and prejudice the jury and she ruled that prosecutors could only refer to her as an actress, dancer and model. Wood also ruled the government cannot introduce evidence implying that Gannon is a prostitute.
The judge did rule that prosecutors could refer to Gannon by her screen name of Marylin Star and state the actress had no prior experience in financial banking or securities trading.
McDermott, Gannon and Anthony Pomponio, another man with whom the actress was involved, were indicted in January for their role in the alleged two-year insider trading scheme.
While Pomponio will also stand trial, Gannon, 30, is currently living in Canada and remains a fugitive.
The charges are based on allegations that McDermott stole confidential information from his firm about six upcoming mergers involving regional banks and gave it to Gannon. She, in turn, allegedly passed the tips to Pomponio. Prosecutors alleged Gannon and Pomponio made more than $170,000 in illegal profits based on the nonpublic information.
Keefe, Bruyette is an investment banking firm that advises companies in connection with mergers and acquisitions and specializes in the banking and financial services industries. From January 1994 through December 1998, Keefe, Bruyette acted as the financial advisor in 116 announced mergers and acquisitions of banks and thrifts.
As president of Keefe, Bruyette during 1997 and chairman and CEO from Jan. 1, 1998 until his resignation last June, McDermott had access to nonpublic information about the firm’s clients.
