February 2, 2012- In Manhattan, federal prosecutors charged three former traders from Credit Suisse with fraud for inflating mortgage bond values in 2007. Prosecutors say the inflating of the bond values came at a time when the housing market was just beginning to deteriorate.
Experts say this is a rare prosecution of executives of Wall Street related to their conduct during the recession of 2007 and 2008. The government alleges the three hatched the scheme to increase the year end bonuses they were to receive.
These charges involving London and New York traders have come just one week following President Obama’s pledge to increase efforts to investigate financial firms and banks. Two of the three traders from Credit Suisse, Salmaan Siddiqui and David Higgs, have already pleaded guilty. Both are currently cooperating with prosecutors. The third, Kareem Serageldin, their former boss, was in charge of a group of traders.
Prosecutors urged Serageldin, a U.S. citizen living in London, via a conference call to return to the U.S. to face his charges. A lawyer for Serageldin said his client had not done anything illegal and would cooperate with investigators.
Higgs and Siddiqui appeared in court on Wednesday and said they took part in the fraud at Serageldin’s request.