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Broker duo face fraud charges
4 Sep 2008Two former Credit Suisse brokers have been charged with fraudulently selling corporate clients subprime mortgages linked to auction-rate securities, the investment products that collapsed to be practically worthless.
Meanwhile, the New York attorney general's office is issuing subpoenas on several Bank of America executives as it broadens its probe into the bank's marketing of auction-rate securities.
A string of banks have agreed to pay back customers who left with the securities. The banks were accused of saving themselves by offloading the securities even as the market for them collapsed.
Ex-Credit Suisse brokers Julian Tzolov, 35, and Eric Butler, 36, falsely told clients the products were backed by federally guaranteed student loans and were a safe alternative to bank deposits or money market funds, said a spokesman for Brooklyn Attorney Benton Campbell.
The scheme “foisted more than $1 billion (£560.9 million) in subprime-related securities” on customers, the US Securities and Exchange Commission said.
