Former San Francisco Investment Banker Sentenced for Insider Trading

May 17, 2010 - SAN FRANCISCO—Adnan S. Zaman was sentenced today to 26 months in prison for committing securities fraud by engaging in insider trading in 2006 and 2007, United States Attorney Joseph P. Russoniello announced.

In his guilty plea on Jan. 15, 2010, Zaman, who was an investment banker with Lazard Ltd. in San Francisco during the relevant period, admitted to participating in an insider trading scheme from in or about September 2006 through in or about May 2007. Lazard was a financial advisory and asset management firm which, among other things, provided advice to public and private companies on mergers and acquisitions, restructuring and capital raising.

According to the plea agreement, Zaman, in violation of his fiduciary and other duties of trust and confidentiality, and contrary to Lazard’s policies and training, misappropriated material, non-public information from Lazard and its clients and tipped other individuals who executed securities transactions based upon that information. Those persons also traded upon tips Zaman passed to them about material, non-public information he obtained from a friend who worked for the San Francisco office of an entity whose business involved, among other things, the acquisition of publicly-traded companies.

The tippees profited in excess of $488,000, and paid to Zaman cash and other financial benefits valued at approximately $68,800.

Zaman, 31, of San Jose, California was charged in a criminal information filed on Dec. 16, 2009, with one count of securities fraud (insider trading), in violation of 15 United States Code Sections 78j(b) and 78ff. Zaman posted bond and has been out of custody since his arraignment on Dec. 17, subject to certain terms and conditions of release.

The sentence was handed down by U.S. District Court Judge Susan Illston, who also sentenced the defendant to a three-year period of supervised release, to pay $78,456 in disgorgement and pre-judgment interest ordered in a parallel civil enforcement proceeding brought against Zaman by the Securities and Exchange Commission, and to perform 800 hours community service. The defendant will begin serving the sentence on or before July 6, 2010.

Thomas E. Stevens is the Assistant U.S. Attorney who is prosecuting the case, with the assistance of Ponly Tu. The prosecution is the result of an investigation by the Federal Bureau of Investigation. The U.S. Attorney’s Office acknowledges the valuable assistance of the Washington D.C. Headquarters Office of the Securities and Exchange Commission, and the cooperation of Lazard Ltd., in this investigation.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for the victims of financial crimes.