U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22039 / July 15, 2011
Securities and Exchange Commission v. Vinayak S. Gowrish, 09-CV- 5883 (SI) (N.D. Cal.)
SEC OBTAINS INJUNCTION AND OVER $112,000 IN MONETARY RELIEF AGAINST FORMER PRIVATE EQUITY ASSOCIATE FOUND LIABLE IN INSIDER TRADING RING
The Securities and Exchange Commission today announced that The Honorable Susan Illston of the United States District Court for the Northern District of California on July 14, 2011 ordered former TPG Capital, L.P. (“TPG”) private equity associate Vinayak S. Gowrish to pay in excess of $112,000, consisting of $12,000 in disgorgement (with interest to be calculated thereon) and a $100,000 civil penalty, for his role in a serial insider trading ring. Judge Illston also issued a permanent injunction against Gowrish enjoining him from future violations of the antifraud provisions of the federal securities laws (Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder). A federal jury on February 3, 2011 found Gowrish liable for illegally tipping material, nonpublic information that TPG was in negotiations to acquire three separate publicly traded companies: Sabre Holdings Corp. (“Sabre”), TXU Corp. (“TXU”), and Alliance Data Systems Corp. (“ADS”).
The Commission’s complaint alleged – and the jury found – that Gowrish, a former associate at multi-billion dollar private equity firm TPG, misappropriated material nonpublic information from his employer in connection with TPG’s negotiations to acquire Sabre, TXU, and ADS. Gowrish tipped the confidential acquisition information to his long-time friend, Adnan Zaman, a former investment banker at Lazard Frères & Co. LLC. Zaman, in turn, tipped the information to their two friends, Pascal S. Vaghar and Sameer N. Khoury. On the basis of the information provided by Gowrish through Zaman, Vaghar and Khoury then traded Sabre, TXU, and ADS securities, realizing approximately $375,000 in illicit profits. The Commission’s complaint alleged that, in exchange for the confidential information, Vaghar provided cash kickbacks to both Gowrish and Zaman. The jury found that Gowrish violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Zaman, Vaghar, and Khoury previously consented to the entry of final judgments permanently enjoining them from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Zaman and Vaghar were also enjoined from violations of Section 14(e) of the Exchange Act and Rule 14e-3 thereunder. Zaman is currently serving a 26-month federal prison sentence for his role in the scheme.