Sunday, April 7, 2013

Ex-Credit Suisse trader pleads not guilty to MBS price inflation

By Nick Brown

(Reuters) - A former Credit Suisse trader pleaded not guilty on Friday to charges of inflating the prices of subprime mortgage-backed bonds to the tune of $540 million.

Kareem Serageldin, who was extradited to the U.S. by British officials this year, entered his plea at an arraignment in Manhattan federal court, a spokeswoman for the Manhattan U.S. Attorney's office said on Friday evening.

Serageldin, 39, is slated to appear in court again next Friday before Judge Alvin Hellerstein, spokeswoman Julie Bolcer said.

The Swiss bank's former global head of structured credit is accused of artificially inflating the prices of mortgage-backed bonds between August 2007 and February 2008, when the U.S. subprime housing market was collapsing and the bonds were losing value at an alarming rate.

A lawyer for Serageldin could not immediately be reached for comment.

According to the U.S. indictment against him, Serageldin devised the scheme to "enhance his apparent job performance" because he wanted a larger bonus and he knew he was in line for a big promotion.

Before the alleged price manipulation came to light, Credit Suisse awarded him a bonus worth $7 million for his 2007 performance, of which $1.7 million was in cash and $5.3 million in Credit Suisse shares. The bank subsequently took the shares back.

Two of Serageldin's former colleagues who reported to him at the time, David Higgs and Salmaan Siddiqui, pleaded guilty in a U.S. court in February 2012 to charges of conspiracy to commit wire fraud and falsify books and records.

(Reporting by Nick Brown in New York; Additional reporting by Estelle Shirbon in London; editing by Xavier Briand)

Source: http://news.yahoo.com/ex-credit-suisse-trader-pleads-not-guilty-mbs-011633510--finance.html

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