NEW YORK, May 30: US prosecutors on Tuesday charged a top Pakistani investment banker, Aijaz Rahim, with earning more than $7.5 million in illegal profits from an insider trading scheme that they say was run by a former Credit Suisse banker, also a Pakistani.
In a 26-count complaint filed in the Federal District Court in Manhattan, the US District Attorney charged Mr Rahim, head of investment banking at a bank in Pakistan, of conspiracy and securities fraud, said a report in the New York Times.
Mr Rahim is accused of profiting from confidential information about nine deals, including the $45 billion buyout of TXU, the Texas energy giant. Credit Suisse was an adviser on all nine deals.
The US Attorneys office refused to discuss the indictment and declined to say whether the warrants were executed in Pakistan or the United States. They would also not disclose whether Mr Rahim would be extradited to the United States anytime soon.
“We have issued warrants for his arrest and would not discuss as to how it will be executed,” Rebecca Carmichael, a spokeswomen for the District Attorneys’ office told Dawn.
Two weeks ago, the Securities and Exchange Commission amended its complaint to accuse Mr Rahim of securities fraud. Citing telephone and email records, prosecutors said that from April to February, Mr Rahim received confidential information from Hafiz Mohammad Zubair Naseem, 37, at the time a junior associate in Credit Suisse’s global energy group.
The SEC said in its amended complaint that both men once worked for the American Express, Lahore, the report said. Prosecutors and the SEC have accused Mr Naseem of repeatedly calling Mr Rahim’s home and cellphone from his office phone at Credit Suisse, divulging information about deals in which the bank was an adviser. Shortly after the calls, Mr Rahim would buy shares in companies involved in the transactions.
Altogether, prosecutors said Mr Rahim earned more than $7.5 million from the nine transactions. More than $5.1 million of that stemmed from trading in TXU alone.
According to the complaint, last spring Mr Naseem opened an account at an unnamed brokerage in Pakistan, authorising Mr Rahim to manage it. Citing email messages obtained from Credit Suisse, the complaint says that Mr Naseem told Mr Rahim that he could do whatever he wanted in the account. In one email message, Mr Naseem concluded: “Let the fun begin.”
However, the Times said that a Federal Bureau of Investigation, on whose sworn testimony the complaint is based, said that he had not obtained the accounts records and could not verify what, if any, trading occurred.
Mr Naseem, who was arrested at his office on May 3, has been charged with conspiracy and securities fraud. He posted bond and is under house detention.
Reuters adds: US federal prosecutors are seeking to recover about $9.8 million from two bank accounts allegedly linked to Mr Rahim.
In a complaint filed in US District Court in Manhattan on
Wednesday, prosecutors said they are seeking to recover the funds because they constitute “or were derived from proceeds traceable to an offence.” Proceeds from stock sales in four of the deals Rahim learned about from Naseem were deposited in the two bank accounts at Julius Baer, the complaint said.
Those four deals involved John H. Harland Co, Hydril Co, Caremark Rx Inc and TXU Corp., the complaint said.
