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A Blackstone Group executive is facing charges by the U.S. Securities and Exchange Commission after allegedly fronting an insider trading scam that involved supermarket chain Albertsons.
According to the complaint, Blackstone managing director Ramesh Chakrapani tipped off a friend with private information regarding the acquisition of Albertsons in 2006 by private equity firm Cerberus, before it was announced to the public. The SEC alleges Chakrapani's actions raked in about $3.6 million in illegal profits.
"We are shocked by this alleged breach of the law and violation of our own compliance policies and ethical standards," said Peter Rose, spokesman for Blackstone.
The original acquisition, valued at $17.4 billion, included splitting up the Albertsons stores between a consortium of buyers, including Supervalu, drugstore chain CVS and the New York-based Cerberus.
At that time, Albertson's, Inc. was the nation's second-largest supermarket chain. The SEC is alleging that the Blackstone team, led by Chakrapani, advised Albertsons on the deal.