Former Credit Suisse broker arrested in US

A former Credit Suisse broker has been arrested for fraud and conspiracy over deceptive sales of subprime-related auction-rate debt in the United States.

This content was published on September 5, 2008 minutes

He is one of two former brokers at the bank accused by US authorities of misleading customers into believing that auction-rate securities in their accounts were a safe and liquid alternative to bank deposits or money market funds.

One of the two men appeared in court in New York on Wednesday to plead not guilty to the charges. The second was arrested at John F. Kennedy airport and taken into custody on Thursday.

When the mortgage-backed auction rate securities market failed earlier this year, the Credit Suisse clients lost their money.

The US Attorney's office in New York and the Securities and Exchange Commission said the case was part of an industry-wide probe of the securities.

Credit Suisse said in a statement that it was cooperating with authorities over the former employees. The bank said the former employees had been suspended and then resigned in 2007 after their actions were detected.

Prosecutors in several states and the SEC have reached settlements with several major big investment banks in the past month over their handling of the risky debt.

In a separate complaint, the SEC said that the two men made unauthorized purchases of more than $1 billion in auction rate securities for corporate customers' accounts.

In August, Credit Suisse was sued in the US over dubious auction-rate securities trading involving $450 million (SFr481 million).

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