A former Credit Suisse Group (CSGN) banker and a Pakistani financier were indicted by a U.S. grand jury in New York for conspiring to make illegal insider trades related to acquisitions on which the bank advised.
The 26-count indictment filed today in federal court in Manhattan names as defendants Hafiz Muhammad Zubair Naseem, who worked at the New York office of Zurich-based Credit Suisse, and Ajaz Rahim, former head of investment banking for Faysal Bank Ltd. (FABL) in Karachi, Pakistan. They must appear in court to enter a formal plea to the charges.
Prosecutors charged Naseem in May with feeding tips to Rahim on a $32 billion buyout bid for TXU Corp. and eight other takeovers in which the bank was an adviser. The indictment, which repeats the earlier charges, formalizes the case against the men and is legally required before the government can put them on trial.
The case stems from a probe of insider trading in TXU options days before Kohlberg Kravis Roberts & Co. and Texas Pacific Group, now TPG Inc., disclosed their leveraged buyout of the Dallas-based power producer TXU on Feb. 26.
Prosecutors say Naseem, a Pakistani citizen who was 37 when charges were announced, placed calls to Rahim, 44, before deals involving TXU, Hydril Co., Trammell Crow Co., John H. Harland Co., Energy Partners Ltd. (EPL:US), Veritas DGC Inc., Jacuzzi Brands Inc., Caremark Rx Inc. and NorthWestern Corp. (NWE:US)
The tips allegedly began in April 2006, soon after Naseem began working on a team of energy bankers in Credit Suisse's New York offices.
``The charges were expected, and we anticipate being victorious in court,'' Naseem's lawyer, Michael Bachner, said.
Rahim's lawyer, Spencer Barasch, didn't immediately return a call seeking comment.
Credit Suisse, Switzerland's second-biggest bank behind UBS AG (UBSN), said in a May 3 statement that it was ``shocked and extremely disappointed that an employee would violate not only our trust, but the trust of our clients.''
The bank fired Naseem and was credited by the U.S. Securities and Exchange Commission with assisting its probe.
The SEC previously filed a civil lawsuit in U.S. District Court in Chicago against Naseem, Rahim, a couple in London and an investor it believes lives in Switzerland. The SEC accused those defendants in the suit of making insider trades in TXU securities.
Credit Suisse spokeswoman Victoria Harmon wouldn't comment on today's indictment.
The case is U.S. v. Naseem, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: David Scheer in Washington email@example.com; David Glovin in New York federal court at firstname.lastname@example.org.
To contact the editors responsible for this story: Patrick Oster at email@example.com and; Erik Schatzker at firstname.lastname@example.org.