Former Credit Suisse Group AG traders David Higgs and Salmaan Siddiqui pleaded guilty to falsifying prices tied to collateralized debt obligations to meet targets and boost year-end bonuses. Switzerland’s second-largest bank said in 2008 it would take writedowns on asset-backed securities after finding “mismarkings” by a group of traders. The bank said it would write down $2.65 billion after a review found pricing errors on residential mortgage-backed bonds and CDOs made “by a small number” of traders who were subsequently fired or suspended.
Higgs and Siddiqui said today in Manhattan federal court today they engaged in the scheme at the direction of their supervisor at the time, Kareem Serageldin. Serageldin, who the bank today said was fired along with the two defendants in 2008, was global chief of synthetic CDOs at Credit Suisse.
| MF Global’s missing cash mostly accounted for |
| WASHINGTON — Investigators have located almost all the $1.2 billion first reported missing when securities company MF Global went under last year. |
| People briefed on the matter tell The Associated Press that the money has been tracked to other customer accounts and banks. |
| Investigators for financial regulators and trustees representing the company and its customers have been trying to track down the money. MF Global, headed by former New Jersey Gov. Jon Corzine, failed in October after a disastrous bet on European debt. |
| Brokerages are supposed to keep customer money separate from company funds. The people said the company misused the money to meet other financial needs as it collapsed. –AP |
U.S. District Judge Alison Nathan asked Higgs why he committed the crime and whether there was a monetary benefit.
“Yes — a year-end bonus, your honor,” Higgs responded.
The prosecution is one of only a handful brought over charges tied to the subprime-mortgage market. The government failed in its biggest prosecution tied to the 2008 financial collapse when ex-Bear Stearns Cos. hedge-fund managers Ralph Cioffi and Matthew Tannin were acquitted in 2009 in Brooklyn, New York federal court of charges they misled investors who lost $1.6 billion.
Higgs and Siddiqui pleaded guilty to one count each of conspiracy to falsify books and records and commit wire fraud. The count carries a maximum five-year term and three years supervised release. They are both cooperating with the probe.
Higgs and Siddiqui will be released on $500,000 bond each while they await sentencing. Higgs will live in the U.K. and Siddiqui, who lives in McLean, Virginia, was ordered to surrender his passport.
