NEW YORK (Reuters) - A former Credit Suisse Group <CSGN.VX> investment banker convicted of leaking inside information about pending mergers deserves "a substantial sentence" in prison, in part to send a message to others on Wall Street, U.S. prosecutors say.
By Martha Graybow
NEW YORK (Reuters) - A former Credit Suisse Group <CSGN.VX> investment banker convicted of leaking inside information about pending mergers deserves "a substantial sentence" in prison, in part to send a message to others on Wall Street, U.S. prosecutors say.
Hafiz Naseem, 37, who had worked at the bank's Global Energy Group in New York from 2006 until early 2007, faces sentencing in U.S. District Court in Manhattan on Friday afternoon. A jury found him guilty in February of participating in a $7.5 million trading scheme.
At trial, prosecutors said Naseem leaked confidential information about takeovers, including the $32 billion private equity buyout of power company TXU Corp, to a friend in his native Pakistan, who then traded on the illicit tips. Naseem was convicted of insider trading and conspiracy to commit securities fraud.
!ADVERTISEMENT!Prosecutors, in court papers filed on Thursday, urged Judge Robert Patterson to sentence Naseem to an 8-to-10 year prison term as recommended by the federal Probation Department.
"Naseem's crimes can only be understood as the product of his greed and recklessness," prosecutors wrote.
They said Naseem bought at least 10 highly expensive watches, engaged in high-stakes gambling and spent money freely, "even by comparison with standard practices of highly compensated investment bankers," with money that appears to be linked to illicit trading profits.
They wrote that "a substantial sentence is necessary to send a message to Naseem, others on Wall Street and in similar positions where client confidences are absolutely necessary and required for the security of our capital markets."
An attorney for Naseem, Michael Bachner, said on Friday that "the government's arguments are nothing new" and "our position is that the sentencing papers we filed support and scream out to the court for leniency." Naseem has been in custody since he was found guilty.
His lawyers, in their own court papers, said that Naseem has "extraordinary family responsibilities, including to a young daughter with cerebral palsy."
The Probation Department's recommended sentence "would be unduly harsh in a case where the defendant received no financial gain and where his prolonged absence would devastate a family," his lawyers wrote.
Prosecutors countered that Naseem received nearly $200,000 in wire transfer payments during the course of the trading conspiracy. The money appeared related to the plot, not money transfers from Naseem's father raised through legitimate means, as the ex-banker had argued, the prosecutors said.
Naseem was arrested in May 2007. At trial this year, he was found guilty of feeding nonpublic material information to Ajaz Rahim, a former head of the investment banking group at Faysal Bank Ltd <FYBL.KA> in Pakistan. Rahim was not on trial. An arrest warrant is pending against him.
The case, with its links to Pakistan and big corporate takeovers, has shown the far-reaching scope of insider trading prosecutions brought by U.S. authorities in recent years.
(Reporting by Martha Graybow, editing by Dave Zimmerman)
