Friday, May 4, 2007
The Securities and Exchange Commission today charged Hafiz Naseem, an investment banker with Credit Suisse (USA) LLC, with illegally divulging non-public information to a person believed to be a banker in Pakistan concerning the leveraged buyout of TXU Corp. by an investor group led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group. Naseem misappropriated the information from his employer, Credit Suisse, which served as a financial advisor to TXU in connection with the buyout.
The Commission originally filed a complaint in the U.S. District Court for the Northern District of Illinois on March 2, 2007, alleging insider trading ahead of the TXU buyout against Certain Unknown Purchasers of TXU Call Options. Today, the Commission amended its complaint to name Naseem as a defendant. The Commission's Second Amended Complaint alleges that Naseem, in breach of his duty to Credit Suisse and its client TXU, telephoned the Pakistani banker on several occasions in February 2007 and disclosed non-public, material information about the proposed but unannounced TXU buyout. The Pakistani banker allegedly traded on the inside information provided by Naseem and reaped millions of dollars in profits when the buyout was publicly announced. In addition to tipping at least one of the traders in the TXU case, the SEC alleges that Naseem tipped the Pakistani banker and possibly others concerning eight additional mergers or business deals since joining Credit Suisse's New York office in March 2006.
Criminal charges were filed against Naseem yesterday in Manhattan.