Credit Suisse Banker Denied Bail in Insider Trading Case
Credit Suisse Group investment banker Hafiz Naseem, charged Thursday with leaking confidential information about pending merger agreements, was denied bail Friday on the grounds that he is a flight risk.
Among the merger agreements that the U.S. Securities and Exchange Commission has accused Naseem of revealing is a deal involving Texas utility giant TXU Corp.
Naseem will be detained until he gets a substantial co-signer for bail bond, sources told CNBC.
Naseem started working at Credit Suisse Group in March 2006 and immediately began sharing information about pending business deals with a Pakistani banker, the SEC alleged.
From his office telephone, regulators charged, Naseem called the banker at home and on his cell phone in advance of -- and frequently the same day or the day before -- merger announcements. Naseem served as an investment banker or financial adviser in all the mergers involved, the SEC said.
"This investigation isn't over," said Stephen Korotash, chief trial counsel in the SEC's Fort Worth, Texas, office. "We know there are others out there who think they've escaped detection. They're wrong. We're coming after them."
An attorney for Naseem, a Pakistani citizen, could not immediately be identified. The Pakistani banker was not identified by name. The charges were filed in federal court in Chicago.
A Credit Suisse representative could not immediately be reached for comment. Korotash said the firm cooperated in the probe.
The most recent round of phone calls occurred in February, regulators allege, when Naseem placed several calls to the Pakistani banker in the weeks ahead of the Feb. 26 announcement that TXU had agreed to be purchased by a group led by Kohlberg Kravis Roberts and Texas Pacific Group. The banker generated profits of about $5 million by trading on the inside information, the SEC alleged.
Besides providing the TXU tip, the SEC said Naseem called the Pakistani banker shortly before pending mergers involving eight other companies, including Hydril and Trammell Crow , which merged with CB Richard Ellis Group . The Pakistani banker realized profits of about $2.4 million in connection with purchases of securities of these other companies, regulators charged.
The Pakistani banker also provided information about some of the deals to high-profile financial executives in Pakistan, who in turn traded ahead of merger announcements, the SEC said. The SEC did not identify those executives.