U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23341 / September 10, 2015
Securities and Exchange Commission v. Maher F. Kara, et al., Civil Action No. 3:09-cv-1880-EMC (N.D. Cal. filed Apr. 30, 2009)
Maher Kara, Karim Bayyouk, and Bassam Salman Settle Insider Trading Charges
The Securities and Exchange Commission announced today that on August 21, 2015, the Honorable Edward M. Chen of the United States District Court for the Northern District of California entered a final judgment against defendants Maher F. Kara, Karim I. Bayyouk, and Bassam Y. Salman.
In its complaint, the SEC alleged that Maher Kara, a former director in Citigroup Global Markets' investment banking division in New York, repeatedly told his brother about upcoming deals involving Citigroup's healthcare industry clients. Kara's brother, in addition to buying stock and options in target companies that were the subject of the Citigroup deals, leaked the information to a network of friends and family in California, Illinois, and Michigan, who also traded in advance of the deals. Eight individuals were charged in the trading scheme, including Maher Kara, Michael Kara (brother of Maher Kara), Salman (brother of Maher Kara's wife), Bayyouk (Salman's brother-in-law), and four others, who already have settled the Commission's charges against them.
Kara, Bayyouk, and Salman consented to the entry of final judgment in the SEC's civil action against them. The final judgment imposes on each a permanent injunction against future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder.
On July 6, 2011, Maher Kara pleaded guilty to federal criminal charges of securities fraud and conspiracy in a parallel criminal action before the United States District Court for the Northern District of California in United States v. Maher F. Kara, No. 09-CR-417-EMC (N.D. Cal.). On September 3, 2013, in United States v. Karim I. Bayyouk, No. 3:12-CR-420-EMC (N.D. Cal.), a jury found Bayyouk guilty of the criminal charge of obstruction of proceedings before the SEC, which arose from the SEC's investigation into the insider trading scheme. On September 30, 2013, a jury found Salman guilty of one count of conspiracy and four counts of securities fraud in another parallel criminal action before the United States District Court for the Northern District of California in United States v. Bassam Y. Salman, No. 3:11-CR-625-EMC (N.D. Cal.). Maher Kara was sentenced to three months' home detention, Bayyouk was sentenced to 18 months in prison and ordered to pay a fine of $5,100, and Salman was sentenced to 36 months in prison and ordered to pay approximately $1.2 million in restitution and forfeiture.
The SEC's civil action against Maher Kara's brother, Michael Kara, continues in district court.
For additional information regarding prior Commission action relating to this case, see Litigation Release No. 21020 (Apr. 30, 2009).