Pakistani Banker Charged for Insider Trading Scheme

Posted on May 5, 2007
Filed Under >Adil Najam, >Bilal Zuberi, About ATP, Economy & Development, Law & Justice, Pakistanis Abroad, People
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Bilal Zuberi and Adil Najam

ATP takes pride in highlighting the successes of Pakistanis in many different realms of life, locally and internationally. Just yesterday we all read about the uplifting story of Pakistani entrepreneurs who had reached a succesful climax in their venture by taking their company to a proftable IPO.

But the following news is something that shames all of us Pakistanis. It is indeed the doing of one person but one can see how it reflects badly on all of us Pakistanis. At ATP, our stand is that we are always for Pakistan, which means that when things are wrong we write about them in the spirit of improving them….and highlighting why they should be improved. That said, we also realize that so far the case has not been proven in a court against Mr. Naseem, and until then, he remains just a suspect.
According to the reports (here, here and here):

A Credit Suisse investment banker was charged on Thursday for an insider trading scheme linked to acquisitions involving nine publicly traded U.S. companies that netted a co-conspirator more than $7 million.

Hafiz Muhammad Zubair Naseem, a 37-year-old Pakistani who worked for Credit Suisse’s Global Energy Group in New York, has been charged with one count of conspiracy and 25 counts of securities fraud, prosecutors said in a complaint.

The complaint alleged that between April 2006 and February 2007 Naseem tipped off a co-conspirator about acquisitions involving Northwestern Corporation, Energy Partners, Veritas DGC, Jacuzzi Brands Trammell Crow Co., Hydril Company, Caremark RX, John H. Harland Co., and TXU Corp…

Mr. Naseem, a native of Pakistan who lives in Rye Brook, N.Y., was arrested late yesterday at Credit Suisse offices at Madison Square Park in the Flat Iron District after returning to work from a personal trip to Pakistan, according to people close to the situation.

He was taken to the Federal Bureau of Investigationâ€℠¢s offices in Lower Manhattan, where he emerged, clad in a dark slacks and white shirt, as he was transported to a federal jail in Brooklyn. He is expected to be arraigned today in Federal District Court in Manhattan….

The bank said that it “immediately brought the activities of this employee to the attention of the relevant authorities� and would continue to work with them.

After an inquiry from federal investigators in March, Credit Suisse helped identify Mr. Naseem as someone of interest. Although Mr. Naseem continued to work at the bank, he returned to Pakistan for a visit and did not return until a few days ago.

It appears that Mr. Naseem had a co-conspirator in this scheme whose identity has been withheld. Even though the co-conspirator has been identified as Mr. CC-1, it appears he was also a Pakistani and a banker. There are some leads that suggest that the co-conspirator might be a high ranking official at a financial institution in Pakistan. Forbes has reported that the suspect is being held without bail because given his stronger ties to Pakistan than the United States, there is danger of him fleeing the country.

NASEEM would typically call CC-1 at his home or on CC- 1’s cell phone in advance of a public announcement that a particular Issuer was to be acquired by another entity and he would provide Credit Suisse Inside Information to CC-1 regarding the acquisition in question. Shortly after receiving such a call, CC-1 would purchase securities in that Issuer based on the Credit Suisse Inside Information he received from NASEEM. Following public disclosure that an Issuer was being acquired — which occurred after CC-1 had already purchased securities in that particular Issuer — CC-1 would quickly sell all of the securities he had purchased in advance of the public disclosures. CC-1 executed dozens of securities transactions, including trades in an offshore account, based on Credit Suisse Inside Information; CC-1 profited from his trading in each of the Subject Securities and earned total profits in excess of $7.5 million from the scheme…

Mr. Naseem authorized the Pakistani banker, who is identified in the criminal complaint as “co-conspirator 1� to operate a brokerage account on his behalf, according to the deposition of the Federal Bureau of Investigation agent in charge of the case.

After confirming in an e-mail message that the banker “can do whatever he wants,â€Â? the agent said that Mr. Naseem concluded one message with the comment: “Let the fun begin”…

Naseem is due to appear in Manhattan federal court on Friday. If convicted he faces up to five years in prison for the conspiracy charge and up to 20 years in prison for each of the securities frauds charges.

Obviously, as painful as it is to see such perpetrators being identified as Pakistani nationals in the international press, a report like this does not at all prove that all Pakistanis are frauds, just as the NED story does not prove that all Pakistanis are entrepreneurs. But what it does highlight is the fact that all of us Pakistanis are ambassadors for Pakistan, and that bad actions of a few can ruin everyone’s image. However, the positive thing is, that by the same token, good acts and achievements by a few will also help everyone image. We will continue to hold hope and praise for positive role-models in our midst.

16 responses to “Pakistani Banker Charged for Insider Trading Scheme”

  1. Till the time, case concludes and the facts related to all individuals are known..it is premature to say that pakistanis are bad. Apart from that we cant accuse whole nation for the actions of individual.

  2. Rusty says:

    This is not as much a factor of him being a Pakistani as the field he is in… I think thsi field is full of people of lax morals and while many scandals have briken many more do not even make it because the cut throat and scruple less nature of the financing sector attracts that sort of people to it…. not everyone in teh field is bad, but yes (as someone who used to be there) many many many are.

  3. asheikh says:

    Asghar Hussain:

    No, not quite. I’m talking about the attitude represented in the sentences I quoted. Its fairly pathetic actually. There have been other corporate scandals and successes in the US. In those ones there was no community in America that specifically spoke of it-self as being ashamed or proud – granted most have come from the white majority which allows them the privilege to not think in those terms. The debate always revolves around what the consequences are and how to restructure institutions so as to not allow this to happen again.

    The only way we can do that is to transcend the majority-minority dichotomy that is imposed upon us or is imposed upon by ourselves. The founders of the UCC did just that and made a significant contribution to society.

  4. Asghar Hussain says:

    On last comment, so you are saying we should ignore this just because it is only one example?

  5. asheikh says:

    The authors say:
    “Just yesterday we all read about the uplifting story of Pakistani entrepreneurs who had reached a successful climax in their venture by taking their company to a profitable IPO.

    But the following news is something that shames all of us Pakistanis…”

    Perhaps the former (entrepreneurs) example should neither be celebrated nor the latter be so worrisome. It is only inevitable that Pak-Americans / Pakistanis in America, like all other Americans produce skilled entrepreneurs, just as it is inevitable that Pak-Americans / Pakistanis in America produce individuals in the same vein as the Enron, Tyco, WorldComm execs. No biggie.

    Yet the examples and role models we do not celebrate, in many ways continuing on the culture of not paying homage to special individuals, i.e. Dr. Salam, are examples like the Ummah Community Clinic – http://www.ummaclinic.org/?cls=Our_Story&sbcls=10_ Year_Video
    – entrepreneurs in their own right.

    The more worrisome tone in the article for me is how the existence of one company is a source of pride for Pakistanis, and an insider trader of Pakistani descent is a source of anxiety. Both attitudes reflect a dangerous inability to deconstruct the problems within corporate America to prevent scandals from happening. Thus, whereas the personnel of the Ummah Community Clinic scored a milestone recently to enter the debate on health-care reform on the capitol, the authors could never hope to enter the debate within american civil society and among politicians to restructure corporate america. Colonized minds still?

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