Federal regulators today charged two Wall Street brokers with defrauding their customers by making more than $1 billion in unauthorized purchases of securities tied to subprime mortgages. The Securities and Exchange Commission alleges the Credit Suisse Securities employees led corporate customers to believe that securities being purchased in their accounts were backed by federally guaranteed student loans; in reality, they were backed by risky subprime debt.
The agency is seeking unspecified restitution and fines against Julian Tzolov and Eric Butler, who were suspended by Credit Suisse last year. Credit Suisse said the two resigned last September "after we detected their prohibited activity and promptly suspended them." The New York investment firm said it immediately informed the SEC of their activities and has continued to assist the agency in its investigation. (Read more white collar crime stories.)