Ex-Credit Suisse bond players plead guilty to MBS fraud
Mired in legal trouble, two former Credit Suisse (CS) executives plead guilty to charges of inflating prices of subprime mortgage-backed securities in the midst of the housing crisis.
David Higgs and Salmaan Siddiqui each agreed Wednesday to one count of conspiracy to falsify books and records and commit wire fraud. Higgs and Siddiqui formerly served as a managing director and vice president, respectively, at Credit Suisse.
Higgs and Siddiqui face a maximum five years in prison and a fine the greater of $250,000 or twice the gross gain or loss from the alleged offense. The two are cooperating with the investigation.
The U.S. Attorney for Manhattan Preet Bharara and the FBI also charged Kareem Serageldin, Credit Suisse's former global head of structured credit trading.
Bharara's office said the three earned significant year-end bonuses, which were tied to trading book profitability. Credit Suisse later took back the bonuses while the company took a $2.65 billion write-down of its 2007 year-end results.
"While the residential housing market was in free fall, and shock waves were reverberating throughout the economy, these defendants decided they were above the rules of the market and above the law," Bharara said in a release.
The trading book implicated by Bharara's office had a net asset value of $5.35 billion until March 2008.
The Securities and Exchange Commission sued the three bankers and former Credit Suisse bond trader Fasial Siddiqui on similar grounds of fraud.