In an indictment unsealed in federal court in Brooklyn, N.Y., the two former Credit Suisse Securities brokers were charged with deceiving customers in a bid to pump up their sales commissions. The charges against Julian Tzolov, 35, and Eric Butler, 36, were announced by U.S. Attorney Benton Campbell in Brooklyn.
They are charged with securities fraud, wire fraud and conspiracy, carrying maximum total sentences of 25 years and up to $5.25 million in criminal fines.
The Securities and Exchange Commission filed a related civil lawsuit in federal court in Manhattan, alleging that Tzolov and Butler led corporate customers to believe that auction-rate securities being purchased in their accounts were backed by federally-guaranteed student loans and were safe like cash. The SEC is seeking unspecified restitution and civil fines against the brokers, who were suspended by Credit Suisse last year.
The securities actually were backed by subprime mortgages, collateralized debt obligations and other high-risk investments, the authorities said. Because of their higher risk, they brought a higher yield and much larger commissions for the brokers.
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