Credit Suisse Group (CSGN) investment banker Hafiz Naseem may be freed from jail after a federal judge said the insider trading case against him could lead to an acquittal.
Naseem, 37, was arrested in New York on May 3 and charged with leaking tips about nine deals in which Credit Suisse was an adviser. The scheme netted one conspirator more than $7.5 million, U.S. prosecutors said.
``I don't think the case is a slam-dunk acquittal,'' U.S. Magistrate Judge James Francis said today at a bail hearing in federal court in New York.
Francis reversed the decision of another judge and said Naseem may be freed on a $1 million bond after Naseem's lawyer, Marc Mukasey, outlined part of his defense case. Prosecutors didn't appeal by today's 4:45 p.m., meaning Naseem will be freed on bail tomorrow, Mukasey said.
Prosecutors say Naseem, who is a Pakistani citizen, placed calls to a Pakistani banker's home and cell phones before deals involving TXU Corp., Hydril Co., Trammell Crow Co., John H. Harland Co., Energy Partners Ltd. (EPL), Veritas DGC Inc., Jacuzzi Brands Inc., Caremark Rx Inc. and NorthWestern Corp. (NWE)
The tips began in April 2006, soon after Naseem began working on a team of energy bankers in the Swiss firm's New York offices, prosecutors said. The government said Naseem, who lives in Rye Brook, New York, faced more than 30 years in jail.
After a judge said on May 4 that Naseem was likely to flee to Pakistan if released, Mukasey returned to court today and told a different judge that four of Naseem's friends, including a doctor and accountant, were willing to pledge $1 million to ensure he would return to court.
Mukasey also outlined what he said were flaws in the case. He said there were no tapes of Naseem's calls to Pakistan or other evidence proving that Naseem leaked secret information during his conversations, Mukasey said.
``There's not a shred of evidence that my client was giving material, nonpublic information,'' Mukasey said, adding that there were rumors in the marketplace about many of the deals at issue.
The defense lawyer also cited comments to reporters by Pakistani banker Ejaz Rahim, whom Mukasey said was Naseem's alleged conspirator. Rahim denied Naseem leaked inside information, according to Mukasey, who said he would call Rahim to testify on Naseem's behalf at a trial.
Assistant U.S. Attorney Joshua Klein wouldn't say whether Rahim was the unnamed conspirator cited in last week's criminal complaint. He said Rahim may be criminally charged.
``Mr. Rahim is as likely to be a co-defendant as he is to be a defense witness,'' Klein said.
Klein also noted that many of Rahim's trades came almost immediately after his conversations with Naseem.
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