James McDermott Jr., a former top Wall Street executive has pleaded not guilty to allegations he engaged in insider trading with an X-rated movie star with whom he was allegedly intimately involved, his lawyer says.
An indictment was returned Thursday against McDermott, the former chief executive officer at Keefe, Bruyette & Woods, and Kathryn Gannon, known as "Marylin Star" in the adult film industry. A third defendant, Anthony P. Pomponio, also was charged. All three were charged with conspiracy and securities fraud. Prosecutors allege the trio made more than $170,000 in illegal profits.
McDermott, 48, of Briarcliff Manor, N.Y., and Pomponio, 45, of North Caldwell, N.J., have already been arrested and freed on bail. Ms. Gannon, 30, of Miami, Fla., remains a fugitive and is believed to be in Canada.
Denis McInerney, a lawyer for McDermott, said his client will plead innocent and "we look forward to the opportunity to address these allegations in court."
A lawyer for Star would not comment. The New York investment bank chief was accused of tipping Ms. Gannon about companies on the verge of mergers that would dramatically affect their stock prices. Star then allegedly bought the stocks and shared the information with Pomponio, a friend. According to court papers, McDermott, who is married, was intimately involved with Star in a 14-month relationship while the insider trading was going on. Star supposedly met the 48-year-old New York investment banker in September, 1996, while working as an exotic dancer in a bar in New York's financial district. Both were married to others when they met.
Star, 30, who was born in Prince George, B.C., was recently found in Vancouver with her fiance, a local businessman.
