SEC Charges Former Employees of Global Firms in Serial Insider Trading Scheme

SEC Charges Former Employees of Global Firms in Serial Insider Trading Scheme - 12/16/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

SEC Charges Former Employees of Global Firms in Serial Insider Trading Scheme
Staff Writer

http://sec.gov/news/press/2009/2009-266.htm. December 16, 2009
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EXCERPT: The Securities and Exchange Commission today charged two former employees at major global financial institutions and two of their friends in a serial insider trading scheme to profit on highly confidential merger and acquisition information. The SEC alleges that Vinayak S. Gowrish, a former associate at multi-billion dollar private equity firm TPG Capital L.P., and Adnan S. Zaman, a former vice president and investment banker at Lazard Frères & Co. LLC, stole confidential information from their firms in connection with five deals and tipped two friends in exchange for kickbacks. Pascal S. Vaghar and Sameer N. Khoury both then traded stock and options on the basis of the nonpublic information and made nearly $500,000 in illicit profits. According to the SEC's complaint in the case, the illegal tips, trades, and kickback payments were structured to avoid detection. They exchanged illegal tips through coded text messages and yellow sticky notes. Vaghar often wrote checks made payable to himself or cash rather than to Gowrish or Zaman directly so as not to create a paper trail. Vaghar also gave his credit card to Zaman so he could charge purchases of personal items in stores and on the Internet for himself in Vaghar's name. They also attempted to avoid drawing regulatory scrutiny to their illegal activities by deliberately trading relatively small amounts of the targeted securities. "Confidential deal information is not just another commodity that can be traded for profit," said Robert Khuzami, Director of the SEC's Division of Enforcement. "These financial professionals betrayed their firms and clients to make some easy money with their friends, and they tried to cover their tracks to no avail."

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