Ex-Credit Suisse brokers charged in $1B scam

Two former Credit Suisse brokers were charged today with defrauding their customers by making more than $1 billion in unauthorized purchases of subprime-related auction rate securities.
SEP 03, 2008
Two former Credit Suisse brokers were charged today with defrauding their customers by making more than $1 billion in unauthorized purchases of subprime-related auction rate securities. In a complaint filed in U.S. District Court for the Southern District of New York in Manhattan, the Securities and Exchange Commission charged that Julian Tzolov and Eric Butler misled customers into believing that auction rate securities being purchased in their accounts were backed by federally guaranteed student loans and were a safe, liquid alternative to bank deposits or money market funds. Instead, the securities purchased were backed by subprime mortgages, collateralized debt obligations and other non-student loan collateral, the SEC said. “These two brokers foisted more than $1 billion in subprime-related securities upon unsuspecting customers to illegally obtain higher commissions from their sales,” SEC Division of Enforcement director Linda Chatman Thomsen said in a statement. The case “demonstrates how the recent turmoil in the subprime market has affected even investors who had no intention of buying subprime securities,” SEC New York regional office associate director Andrew Calamari said in the release. The brokers, who were employed at Credit Suisse Securities (USA) LLC in New York, deceived foreign corporate customers in short-term cash management accounts. The employees resigned in September 2007 after Credit Suisse “detected their prohibited activity and promptly suspended them,” Credit Suisse spokesman David Walker wrote in an e-mail. “Credit Suisse immediately informed our regulators and we have continued to assist the authorities,” he wrote. Attorneys representing the two brokers were not immediately available for comment.

Latest News

FINRA fines Vanguard $950,000 over decade of cost basis errors
FINRA fines Vanguard $950,000 over decade of cost basis errors

Faulty Forms 1099 and account statements reportedly left some Vanguard brokerage customers overpaying or underpaying taxes for over a decade.

More ETFs, more opportunity, more homework
More ETFs, more opportunity, more homework

The democratization of ETFs cuts both ways

Advisor moves: Raymond James, Baird add significant teams in latest recruiting push
Advisor moves: Raymond James, Baird add significant teams in latest recruiting push

Independent broker-dealers snap up experienced advisors as competition for established practices intensifies.

Wells Fargo names COO Scott Powell as its next chief risk officer
Wells Fargo names COO Scott Powell as its next chief risk officer

Derek Flowers, a nearly 30-year veteran, is set to retire in mid-January, handing the reins to the executive who helped lead the bank's regulatory turnaround.

Ameriprise runs advisor ads on ESPN, Golf Channel, CBS
Ameriprise runs advisor ads on ESPN, Golf Channel, CBS

The campaign spans broadcast TV and streaming, as the brokerage faces slowing client net flows and an $8.1 billion advisor team that left to launch an RIA this month.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains