Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Saturday, February 5, 2011

Former TPG Capital Associate Found Liable for Tipping Information about Acquisitions

The SEC announced that on February 3, 2011, a federal jury in the Northern District of California found former TPG Capital, L.P. ("TPG") private equity associate Vinayak S. Gowrish liable for illegally tipping material, nonpublic information that TPG was in negotiations to acquire three separate publicly traded companies: Sabre Holdings Corp. ("Sabre"), TXU Corp. ("TXU"), and Alliance Data Systems Corp. ("ADS").

The jury found that Gowrish, a former associate at multi-billion dollar private equity firm TPG, misappropriated material nonpublic information from his employer in connection with TPG's negotiations to acquire Sabre, TXU, and ADS. Gowrish tipped the confidential acquisition information to his long-time friend, Adnan Zaman, a former investment banker at Lazard Frères & Co. LLC. Zaman, in turn, tipped the information to their two friends, Pascal S. Vaghar and Sameer N. Khoury. On the basis of the information provided by Gowrish through Zaman, Vaghar and Khoury then traded Sabre, TXU, and ADS securities, realizing approximately $375,000 in illicit profits. The Commission's complaint alleged that, in exchange for the confidential information, Vaghar provided cash kickbacks to both Gowrish and Zaman.

Zaman, Vaghar, and Khoury previously consented to the entry of final judgments permanently enjoining them from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Zaman is currently serving a 26-month federal prison sentence for his role in the scheme.

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