May 14, 2007
SEC Adds Tippee Defendant in TXU Insider Trading Case
On May 11, the Commission charged Ajaz Rahim, a Pakistani banker who was employed by Faysal Bank in Karachi, Pakistan with insider trading based on material, non-public information he received from Hafiz Naseem, an employee of Credit Suisse (USA) LLC in New York. In amending its complaint to add Rahim as a defendant, the SEC alleged that, on Feb. 5, 6, 7, 8 and 23, 2007, Naseem telephoned Rahim and conveyed to him non-public, material information concerning the proposed but unannounced leveraged buyout of TXU Corp. and that Rahim, on Feb. 23, 2007, purchased 6,700 TXU call option contracts and 15,000 shares of TXU stock. According to the Commission, these purchases allowed him to reap, following the public announcement of the buyout, trading profits of approximately $5.1 million. The complaint also alleges that Naseem alerted him to pending business combinations and deals involving 9 other issuers for which Credit Suisse served as an investment banker or financial advisor, obtaining profits of $2,425,000. Finally, according to the complaint, Naseem, in order to insure he would obtain a personal, financial benefit from his misappropriations, in May 2006 opened up a brokerage account in Pakistan and granted trading authority over that account to Rahim, his "tippee."
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