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​Ex-Credit Suisse banker faces fine for hiding $100mn loses, escapes jail

Published time: June 25, 2014 09:22
Reuters / Arnd Wiegmann

Reuters / Arnd Wiegmann

A former managing director of investment banking at Credit Suisse who pleaded guilty to hiding more than $100 million in mortgage-backed security losses in 2007, has escaped further jail time, and has been fined after cooperating with prosecutors.

The 44-year old Swiss bank employee David Higgs admitted guilt in 2012, and agreed to cooperate in an investigation of other bank officials. That allowed him to be sentenced to time served, Bloomberg cites the US Justice Department.

He and another trader both admitted they had been engaged in a scheme set up by their supervisor, Kareem Serageldin, who was then the global head of Credit Suisse’s structured credit-trading unit.

All three were falsifying prices tied to collateralized debt obligations in order to meet targets and boost year-end bonuses. The discrepancy was discovered in 2008 by Credit Suisse' internal auditors, which forced the bank to make a $2.65 billion write-down on its portfolio of asset-backed securities in its 2007 accounts.

Former Credit Suisse employee David Higgs (Reuters / Brendan McDermid)

In 2008 all three men were fired.

The government has concluded that without David’s assistance, the case against Mr. Serageldin would have never been brought, and the mastermind of a serious fraud scheme would have certainly escaped punishment,” Bloomberg quotes Higgs’s lawyer, Aaron Goldberg.

The court admitted Higgs’ actions helped create public panic when the housing bubble burst. However “early, full and honest” cooperation with prosecutors allowed the banker to receive a “rare” level of praise, having escaped with a $50,000 fine.

The judge also said she would sign a $900,000 forfeiture order against Higgs, which according to his lawyer exceeds the amount earned as a result of the scheme.

Kareem Serageldin also pleaded guilty in April 2013 and was sentenced to two and a half years for his involvement in the fraud. The court ordered him to pay a $150,000 fine as well as perform community service for two years after his release.

Comments (2)

 

Steven Dean 25.06.2014 10:57

Drake Chen 25.06.2014 10:36

Something is wrong in that picture isn't it ?
While his assistance is needed, means first one caught gets the lowest penalty, his Scam ruined how many people lives ? That he only gets 2 year !
And he isn't feeling remorse at all after two years he will do talkshows and other activity to gain money.
What about the people lives he ruined ? Too BAD !!

  


Yep, this is just wrong.

 

Drake Chen 25.06.2014 10:36

Something is wrong in that picture isn't it ?
While his assistance is needed, means first one caught gets the lowest penalty, his Scam ruined how many people lives ? That he only gets 2 year !
And he isn't feeling remorse at all after two years he will do talkshows and other activity to gain money.
What about the people lives he ruined ? Too BAD !!

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