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10 years for insider trader

Jun 01 2008 15:24 Chad Bray
New York - A former Credit Suisse Group (CS) investment banker was sentenced to 10 years in prison on Friday after being convicted in February of improperly tipping off a prominent Pakistani investment banker about pending mergers, including TXU Corporation's (TXU) proposed buyout by a private-equity group.

At a hearing on Friday, US District Judge Robert Patterson in Manhattan sentenced Hafiz Muhammad Zubair Naseem, a one-time associate at Credit Suisse Securities USA LLC, to 10 years in prison, to be followed by three years supervised release. Naseem also was ordered to forfeit $7.5m.

"I think the sentence is excessive, unnecessary to serve the interest of justice and we regretfully disagree," said Michael Bachner, Naseem's lawyer. "We'll take up those issues on appeal."

Naseem, a one-time member of Credit Suisse's Global Energy Group in New York, was convicted in February of conspiracy and 28 counts of insider trading, following a mistrial last December. Naseem was remanded to jail following his conviction.

He had faced a range of up to 97 months to 121 months in prison under federal sentencing guidelines.

"This crime has to be deterred," the judge said in imposing sentence. "It has to be deterred by a stiff sentence."

Prosecutors had alleged that Ajaz Rahim, one-time country head of investment banking at Faysal Bank, was tipped off by Naseem about proposed acquisitions in which Credit Suisse was acting as an advisor between April 2006 and February 2007. The government alleged that Rahim netted more than $7m in illicit profits as a result of his improper trading.

The transactions included Express Scripts's (ESRX) failed bid for Caremark RX Inc. and the buyout of TXU by a group led by Kohlberg Kravis Roberts and TPG. Caremark was eventually sold to CVS.

Rahim, who also has been charged in the matter, remains in Pakistan.

Prosecutors alleged that Naseem accessed internal computer files at Credit Suisse about pending mergers on which he wasn't working and rifled through the papers on colleagues' desks in search of information.

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