Two former Credit Suisse brokers were charged with defrauding their customers by making more than $1 billion in unauthorized purchases of subprime-related auction rate securities.
In a complaint filed in US 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 says.
The full story is available at the Investment News web-site.