Ex-Credit Suisse Banker May Be Accused of Gambling

Former Credit Suisse Group (CSGN) banker Hafiz Muhammad Zubair Naseem may have leaked inside information to a Pakistani investment banker because Naseem was gambling, prosecutors may tell jurors at his criminal trial next month.

Naseem is accused of tipping Ajaz Rahim, the former head of investment banking for Faysal Bank Ltd. (FABL) in Karachi, Pakistan, about pending deals. Documents turned over to the defense suggest prosecutors may claim Naseem's leak stemmed from ``a gambling problem,'' lawyer Michael Bachner said at a pre-trial conference today. Bachner said Naseem gambled ``less than $5,000'' and denied his client broke the law or couldn't deal with gambling.

``Why would you commit a $7 million fraud to pay a $5,000 debt?'' Bachner said in an interview after the hearing.

The trial, scheduled for Dec. 10 in Manhattan federal court, will be the first insider-trading case to go before a jury among a group of similar indictments this year. Prosecutors in other cases claim there were leaks at Morgan Stanley and Bear Stearns Cos., both in New York, and UBS AG (UBSN), Europe's biggest bank.

In May prosecutors said Naseem, a Pakistani citizen who worked at the New York office of Zurich-based Credit Suisse, fed tips to Rahim on a $32 billion buyout bid for TXU Corp. -- later renamed Energy Future Holdings Corp. -- and eight others in which the bank was an adviser.

Rahim, who's also charged, has denied wrongdoing and is fighting extradition to the U.S. from Pakistan.

Three New Charges

The government today added three counts against Naseem, who now faces a 29-count indictment and more than 30 years in prison. He pleaded not guilty to the three new counts today. Bachner said the new charges were largely ``technical.''

Prosecutors didn't say today whether they'd claim Naseem's motive for the leaks stemmed from gambling. Yusill Scribner, a spokeswoman for U.S. Attorney Michael Garcia, declined to comment. The government may file court papers with a response tomorrow.

At the trial, Naseem will say that Rahim's trades were based on information already in the marketplace, Bachner said. The lawyer said Naseem, of Rye Brook, New York, had gambled just $5,000 in the course of his career.

Bachner has asked U.S. District Judge Richard Berman to exclude any evidence of gambling.

``Hafez has been living with enormous stress,'' Bachner said in explaining his request for a speedy trial.

Prosecutors say Naseem, who was 37 when the charges were announced, placed calls to Rahim before deals involving TXU, Hydril, 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 allegedly began in April 2006, soon after Naseem began working on a team of energy bankers in Credit Suisse's New York offices. Rahim won't be present at the trial, Bachner said.

Credit Suisse fell 18 cents to $56.99 in New York Stock Exchange composite trading at 12:50 p.m.

The case is U.S. v. Naseem, 07-cr-610, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Glovin in New York federal court at dglovin@bloomberg.net.

To contact the editors responsible for this story: Patrick Oster at poster@bloomberg.net; Otis Bilodeau at obilodeau@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.