LAWFUEL – Legal Newswire – Illegal Trading In Connection With Nine Credit Suisse Client Transactions Netted $7.8 Million In Proceeds
MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, announced today that HAFIZ
MUHAMMED ZUBAIR NASEEM, a 37-year-old resident of Westchester
County, New York, was convicted of 29 counts of insider trading
following a 3-week jury trial in Manhattan federal court. NASEEM
was charged with a scheme whereby he stole material, nonpublic
information from Credit Suisse and its clients about 9 pending
mergers and acquisitions, and tipped AJAZ RAHIM, a 45-year-old
resident of Pakistan, about these deals prior to their public
announcement. By trading on the basis this information in
several overseas brokerage accounts, NASEEM and RAHIM netted at
least $7.8 million in proceeds. According to the evidence
presented at trial before United States District Judge ROBERT P.
From September 2005 through March 2006, NASEEM, prior
to his employment at Credit Suisse, stole confidential
information from J.P. Morgan Chase and its clients regarding
potential transactions in the following 8 publicly traded
companies: Northwestern Corporation; Huntsman Corporation;
Aramark Corporation; Education Management Corporation; Alliance
Data Systems; K2 Inc.; Computer Science Systems; and Engineered
Support Systems. He then passed that information along to RAHIM,
who traded on it in an overseas account in Bahrain.
On March 22, 2006, NASEEM left J.P. Morgan Chase and
joined Credit Suisse’s Global Energy Group in the Investment
Banking Division. From April 2006 through February 2007, NASEEM
stole material, nonpublic information from Credit Suisse and its
clients regarding the following 9 publicly traded companies:
Northwestern Corporation, Energy Partners, Ltd., Veritas DGC
Inc., Jacuzzi Brands, Inc., Trammell Crow Co., Hydril Company,
Caremark RX, Inc., John H. Harland Co., and TXU Corp. (these
companies are collectively referred to as the “Issuers” and the
securities in these companies are collectively referred to as the
Credit Suisse was engaged to advise either the target
company or the acquiring entity in connection with business
combination transactions involving the Issuers (the “Subject
Transactions”). NASEEM, who was not assigned to work on any of
the Subject Transactions, repeatedly searched Credit Suisse’s
internal computer databases for confidential documents relating
to the Subject Transactions, opened and read these documents, and
passed the material non-public information concerning the Subject
Transactions in these documents to RAHIM (the “Credit Suisse
Inside Information”). NASEEM also was observed rummaging through
papers on the desks of several analysts when the analysts were
NASEEM provided the Credit Suisse Inside Information to
RAHIM in violation of (a) the duties of trust and confidence owed
by NASEEM to Credit Suisse and its clients, and (b) Credit
Suisse’s written policies, which NASEEM certified he understood,
regarding the use and safekeeping of confidential and inside
NASEEM typically called RAHIM in Pakistan in advance of
a public announcement that a particular Issuer was to be acquired
by another entity. He then provided Credit Suisse Inside
Information to RAHIM regarding the acquisition in question.
Shortly after receiving such a call, RAHIM purchased securities
in that Issuer based on the Credit Suisse Inside Information he
received from NASEEM. RAHIM purchased the securities weeks
before any public announcement was made regarding the Subject
Transactions. Following public disclosure that an Issuer was
being acquired, NASEEM and RAHIM sold all of the securities that
they had purchased, earning millions of dollars in profits.
NASEEM and RAHIM executed dozens of securities transactions,
including trades in two offshore accounts, based on the Credit
Suisse Inside Information. By the end of February 2007, NASEEM
and RAHIM had profited from the trading in each of the Subject
Securities and earned from the scheme total profits of more than
NASEEM was found guilty of all 29 counts in the
Indictment. The conspiracy charge carries a maximum sentence of
5 years’ imprisonment and a maximum fine of the greater of
$250,000 or twice the gross gain or gross loss from the offense.
Each of the twenty-eight securities fraud counts carries a
maximum sentence of 20 years’ imprisonment and a maximum fine of
the greater of $5 million or twice the gross gain or gross loss
from the offense.
Following the verdict, Judge PATTERSON revoked NASEEM’s
bail, and NASEEM was remanded into prison. NASEEM is scheduled
to be sentenced on April 7, 2008 at 4:00 p.m.
A warrant for RAHIM’s arrest remains outstanding.
Mr. GARCIA praised the efforts of the FBI and the U.S.
Securities and Exchange Commission in the investigation of this
case. Mr. GARCIA also thanked Credit Suisse for its cooperation
Assistant United States Attorneys JOSHUA KLEIN and REED
MICHAEL BRODSKY are in charge of the prosecution.