Credit Suisse investment banker held over alleged securities fraud

Credit Suisse investment banker held over alleged securities fraud
NEW YORK: An investment banker from Credit Suisse Securities USA LLC has been charged by U.S. prosecutors with conspiracy and fraud allegedly involving leaking tips on nine acquisitions to investors and thereby capitalizing on it.

The investment banker, Hafiz Naseem, 37, is part of Credit Suisse's global energy group in New York. He was arrested Thursday and charged with 25 counts of alleged securities fraud and one count of conspiracy. According to the complaint, his action allegedly netted profits worth $7.5 million. The leaks are said to have included the proposed $32 billion buyout of Dallas-based power company TXU Corp by a private equity group.

Naseem, who will be presented before a federal magistrate in Manhattan Friday, faces up to 20 years in prison and $5 million in fines on each count of securities fraud.

Prosecutors said Naseem and others engaged in trading in nine public companies based on inside information from Credit Suisse on pending mergers and acquisitions during the period April 2006 and February 2007. They said Naseem acted in collusion with an unnamed co-conspirator by calling him at his home or on his cellphone and passing on information about the proposed mergers. The co-conspirator would then trade in these specified shares, including using an offshore account.

The U.S. Securities and Exchange Commission has initiated civil action against Naseem. It said in a plea before a court that he had shared details on pending mergers with an unnamed Pakistani banker.

The other companies on which Naseem and his accomplices traded were Northwestern Corp., Energy Partners Ltd, Veritas DGC Inc., Jacuzzi Brands Inc., Trammell Crow Co., Hydril, Express Scripts Inc. and John H. Harland Co.

Credit Suisse said in a statement that it is "shocked and extremely disappointed that an employee would violate not only our trust, but the trust of our clients.'' It added that it has "immediately brought the activities of this employee to the attention of the relevant authorities.''

Naseem, who is originally from Pakistan, had studied at a university in Lahore, Pakistan, and was working there for five years at a banking unit of American Express Co. Later, he enrolled as a student of New York University's Stern School of Business from 2002 to 2004. He worked for JPMorgan Chase & Co. before joining Credit Suisse in March 2006.