Credit Suisse banker accused of insider trading

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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 & Co. and TPG Inc. The banker generated profits of about $5 million by trading on the inside information, the SEC alleged.

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.

The scope of the alleged insider trading came into focus as the SEC teamed up with Chicago Board Options Exchange and New York Stock Exchange regulators. Regulators originally started their investigation following reports of suspicious trading in TXU securities.

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On Feb. 23, the Friday before the deal was announced, some 18,000 TXU call options, which give investors the right to buy the stock, changed hands. That was more than seven times the average daily volume for the rest of February and prompted regulators to investigate. The SEC found that some 6,700 of those TXU call options were purchased by the Pakistani banker after receiving a series of phone calls from Naseem.

Authorities in Guernsey, in the English Channel off the coast of France, have frozen the Pakistani banker's profits, Korotash said. To ensure that he would benefit personally, Naseem opened a brokerage account in Pakistan and granted trading authority over the account to the Pakistani banker, the SEC charged.

The SEC on Thursday also charged Francisco Javier Garcia with making profits of about $150,500 from trades in at least 260 TXU call options based on inside information about the buyout. The SEC has already charged two U.K. residents, Sunil and Seema Sehgal, with making a combined $272,000 in profits after trading on inside information about the TXU deal.

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