Credit Suisse broker convicted of fraud
A former Credit Suisse broker has been convicted in New York of fraudulently selling millions of dollars in sub-prime securities to corporate clients that allowed him to generate higher commissions.
According to media reports, after a three week trial Eric Butler was found guilty in the Federal Court in Brooklyn, New York, on all three counts after two hours of jury deliberations.
His former partner and co-defendant Julian Tzolov, who was returned to New York from Spain on 20 July after fleeing prosecution, also pleaded guilty to conspiracy, wire fraud and securities fraud, and testified as a prosecution witness against Butler.
Butler and Tzolov were indicted last year, charged with conducting an illegal scheme in which they falsely told clients their products were backed by federally-guaranteed student loans and were a safe alternative to bank deposits or money market funds.
In fact, the products were actually linked to auction-rate securities.
Butler, who was convicted of conspiracy to commit securities fraud, securities fraud and conspiracy to commit wire fraud, faces a maximum sentence of 45 years in prison.
According to the Securities and Exchange Commission (SEC) the fraud foisted more than $1bn in sub-prime-related securities on customers.
The high-stakes scam is know as a 'bait and switch', which promises clients one product but in fact delivers another to get higher commissions for themselves.
The two men were employed from November 2003 to September 2007 as managing directors in Credit Suisse's private banking division.
Butler ran Credit Suisse's corporate cash management group, a division that helped clients manage excess corporate cash holdings.
Tzolov testified that he and Butler worked together to defraud investors including GlaxoSmithKline Plc, Roche Holding AG and Potash Corp of Saskatchewan.