An investment banker in the Blackstone Group’s corporate advisory services group has been charged by the US Securities and Exchange Commission with an insider trading scheme netting $3.6 million in profits, according to an SEC filing and an internal note from Blackstone co-founder Stephen Schwarzman.
Ramesh Chakrapani is accused of tipping off a financial analyst to details of a takeover of Albertson’s supermarkets by retailers CVS, SuperValu and Cerberus Capital Management in 2006. He was a vice president in New York at the time. He is currently a managing director in Blackstone’s London office. Blackstone has suspended Chakrapani’s employment with the firm.
The SEC complaint alleges that Albertson’s stock and call options purchased in the name of the unnamed financial analysts’ parents were then sold at a profit with the benefit of insider information.
“We are all shocked by this alleged breach of the law and violation of our firm’s compliance policies and ethical standard,” said Schwarzman in an internal memo obtained by The New York Times. “This employee has been suspended and we have told the authorities that they will have our firm’s full cooperation in their investigation into this matter.”
Schwarzman added that this is the first time a Blackstone employee has been accused of any infringement of securities laws and said he is “infuriated” that Chakrapani has blemished the firm’s record of ethical conduct.