Illinois Resident Convicted Of Insider Trading
SAN FRANCISCO – On Monday, September 30, 2013, a federal jury convicted Bassam Yacoub Salman of one count of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371, and four counts of securities fraud or insider trading, in violation of 15 U.S.C. §§ 78j(b) and 78ff, United States Attorney Melinda Haag announced.
The jury found that between 2004 and 2007, Salman, 54, of Orland Park, Illinois, engaged in securities fraud and insider trading relating to securities issued by United Surgical Partners International, Inc. (USPI) and Biosite Incorporated (BSTE). The guilty verdict followed a two week jury trial before the Honorable Edward M. Chen, U.S. District Court Judge.
The charges against Salman were part of a larger, $5.3 million, insider trading scheme first charged in 2009 against Maher Fayez Kara, of San Carlos, Calif., a former investment banker at Citigroup Global Markets Inc. in New York, and Maher Kara’s brother, Mounir Fayez Kara, also known as Michael F. Kara, of Walnut Creek, Calif. In July 2011, Maher Kara and Michael Kara both pled guilty to conspiracy and securities fraud charges and began cooperating with the government.
Evidence at trial showed that, on or about March 23, 2007, Salman, trading in an account owned by his brother-in-law, Karim Bayyouk, caused the purchase of approximately $100,000 in Biosite call options. Salman obtained the inside information about Biosite from Michael Kara, who had first obtained it from his brother, Maher Kara, who worked at Citigroup. Two days later, on March 25, 2007, Biosite announced it was merging with another company. After the merger announcement, Salman sold the options and realized a profit of approximately $947,922. Earlier, in the fall of 2006, evidence at trial showed that Salman purchased securities in United Surgical Partners International, Inc. using inside information obtained from Michael Kara and, initially, from Maher Kara.
On September 4, 2013, in a separate trial, another federal jury convicted Bayyouk, 49, of Livonia, Michigan, of obstructing and impeding an investigation by the Securities and Exchange Commission (“SEC”) into securities fraud and insider trading relating to Biosite Incorporated, in violation of 18 U.S.C. § 1505, arising from a telephone interview with the SEC on or about May 31, 2007.
Salman’s sentencing hearing is scheduled for January 15, 2014, at 2:30 p.m. before Judge Edward M. Chen in San Francisco. The maximum statutory penalty for a violation of 18 U.S.C. § 371 is a sentence of five years and a fine of $250,000. The maximum statutory penalty for a violation of 15 U.S.C. §§ 78j(b) and 78ff is a sentence of twenty (20) years and a fine of $5,000,000. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Adam A. Reeves and Katherine B. Dowling are the Assistant U.S. Attorneys prosecuting the case with the assistance of Maryam Beros, Rayneisha Booth, and Patricia Mahoney. The prosecution is the result of a lengthy investigation by the FBI with substantial assistance from the Division of Enforcement of the SEC’s San Francisco Regional Office.