SEC accuses ex-TPG associate of insider trading

The US securities authority has charged Vinayak Gowrish and others of profiting from sharing inside information about the buyouts of TXU, Sabre Holdings and Alliance Data Systems.

The US Securities and Exchange Commission on Wednesday charged a former associate of TPG Capital, as well as three others, with illegally profiting from sharing confidential information related to three TPG deals.

The SEC alleged that former TPG associate Vinayak Gowrish and Adnan Zaman, a former vice president at investment bank Lazard Freres, together with two of their friends – Pascal Vaghar and Sameer Khoury – violated the antifraud provisions of the US federal securities law.

According to the complaint filed in the US District Court for the Northern Republic of California, Gowrish, who worked in TPG's San Francisco office, and Zaman tipped non-public information to Vaghar and Khoury regarding negotiations by TPG to acquire Sabre Holdings, TXU and Alliance Data Systems. The SEC also alleges that Zaman additionally divulged confidential information that Lazard clients were in negotiations to acquire webMethods and Myogen.

The SEC complaint alleges that both Gowrish and Zaman went against written policies at TPG and Lazard prohibiting sharing insider information.

Vaghar and Khoury both traded stock and options on the basis of the confidential information and made nearly $500,000 in profits, with Gowrish and Zaman receiving kickbacks in the form of cash, free rent and other items totaling approximately $70,000. The information was tipped either through in-person meetings or by writing or texting trading instructions, including how many shares to purchase.

TPG acquired Sabre Holdings in 2006 in a deal valued at $5 billion along with Silver Lake Partners. The firm, run by David Bonderman, joined Goldman Sachs and Kohlberg Kravis Roberts in acquiring energy giant TXU in 2007 for $45 billion in the largest leveraged buyout of all time.

Zaman , Vaghar and Khoury have offered to settle with the SEC to full injunctive relief and disgorgement, while Zaman has also agreed to be permanently barred from associating with any broker or dealer. The SEC is seeking permanent injunctive relief, disgorgement of illicit profits and prejudgment interests, and financial penalties against Gowrish.

The SEC has been on a recent tear ferreting out alleged insider trading schemes and hauling investment industry professionals to court.  In November, the SEC charged 14 with trading on confidential information on a number of deals, including TPG and Silver Lake's 2007 buyout of Avaya, Bain Capital's failed acquisition of 3Com and TPG's 2007 purchase of Axcan.