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Home / India News / 2007 / May 2007 / May 9, 2007
Pak bankers on the run in US insider trading scam
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Pak bankers on the run in US insider trading scam

The incarceration of a Pakistani banker involved in insider trading in the United States, has created alarm among other top bankers in Pakistan, who fear that their names might also emerge during investigations into the scam

New York/Karachi, May 9 : The incarceration of a Pakistani banker involved in insider trading in the United States, has created alarm among other top bankers in Pakistan, who fear that their names might also emerge during investigations into the scam

Banking sources were quoted by the Dawn as saying that a high-level investigation is on about the possible involvement of more Pakistani bankers.

When approached, the State Bank of Pakistan was tight-lipped over the issue.

One Pakistani banker, Ejaz Rahim, left for Canada a month ago and reportedly accepted that a probe was being conducted against him by the Securities and Exchange Commission, USA.

Bankers in Pakistan feared that he could disclose a few more names to avoid harsh punishment.

A spokesperson of the Securities and Exchange Commission said on Monday that an investigation into Pakistani banker Hafiz Naseem's complex web of international insider trading was ongoing which also includes two Indians Sunil Sehgal and Seema Sehgal and a Colombian Francisco Javier Garcia.

The official, however, declined to divulge the name of the Karachi-based banker who acted as the 'tippee' and used the information to make huge profits.

Katherine S. Addleman, Associate Regional Director of the SEC's Fort Worth Regional Office, told the Dawn that the Pakistani banker had agreed to cooperate with the investigators and also consented to freeze his accounts in the United States.

Naseem was an employee of Credit Suisse that was an adviser on the nine deals. He used to pass on information to Ejaz Rahim who executed trades before the deals were announced. Rahim, a former head of Investment Banking Group at Faysal Bank, said he was being investigated by the US Securities and Exchange Commission for having links with Naseem.

The scam appeared in the press last Thursday when Naseem, 37, was arrested in New York and charged with 26 counts of conspiracy and securities fraud. He is accused of leaking details about nine deals, including the largest-ever 32 billion dollars leveraged buyout of TXU.

The SEC complaint said that between January 29 and February 20, 2007, based on the insider information provided by Naseem, Seema Sehgal, through her account at Charles Schwab and Co Inc sold the option contracts, realising trading profits of approximately 144,600 dollars.

This was not the first time that Naseem conveyed material, non-public information to this associate. He began misappropriating material, non-public information shortly after he joined the Swiss bank. The information involved pending business combinations. The calls were made close to announcements of pending mergers.

ANI

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