Adult film star Kathryn Gannon pleaded guilty Tuesday to charges that she conspired to trade stocks on confidential information leaked to her by former Keefe Bruyette & Woods Inc chief executive James McDermott.
McDermott, the first CEO of a Wall Street investment bank to be charged with insider trading, admitted last year that he tipped Gannon, his onetime mistress, to pending bank mergers. He was sentenced to five months in prison.
Gannon was indicted in 1999 along with McDermott, though she fought extradition and resisted leaving her home in Vancouver, Canada. Her guilty plea ends a case that produced tabloid headlines for McDermott and the investment bank he once led.
Gannon pleaded guilty to two conspiracy counts.
"Mr. McDermott told me to keep the information secret," she said. "At the time I did these things, I knew they were wrong," she said.
Gannon, who pleaded guilty under her married name, Kathryn Gannon Gilley, said she'd had a "romantic relationship" with Mc-Dermott.
She faces up to five years in prison on each count when she's sentenced Sept. 20. She was released on US$300,000 bond.
McDermott last year admitted that he gave Gannon confidential information about a potential takeover of Barnett Banks Inc by Sun Trust Inc. He'd been indicted for leaking secrets about five pending mergers in 1997 and 1998.
After receiving the tip, Gannon, who performed under the stage name "Marylin Star," bought 1,800 shares of Barnett Banks stock in August 1997, prosecutors said. Shares of Barnett rose almost US$16 in the next three days, when it was bought by NationsBank Corp. Gannon earned US$88,000, authorities said.
Prosecutors said McDermott, who earned US$10 million from 1996 to 1998 as chief of KBW, gave Gannon the tips to impress her and didn't profit financially. He stepped down as CEO in July 1999.
McDermott was convicted of stock fraud by a jury in 2000, though the verdict was later overturned. He said he pleaded guilty last year so he could get the case "over with."
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