NEW YORK, Nov 23 – A former top Credit Suisse trader was sentenced to two and a half years of prison Friday in New York for inflating sub prime mortgage related bond prices during the housing market collapse.
British citizen Kareem Serageldin, 40, was extradited by Great Britain to the United States in April and accepted to plead guilty.
The fraud allegedly took place between late 2007 and early 2008, as the collapsing US housing bubble sent millions of home mortgages into default and wiped off hundreds of billions of dollars in value from mortgage backed securities widely held by banks and other institutional investors.
In March 2008, Credit Suisse announced it was restating its 2007 year end earnings with a $2.65 billion write down, a large portion of it related to the fraud.
“With today’s sentence, Kareem Serageldin will now pay a steep price for the role he played in a conspiracy to cover up more than one hundred million dollars in sub prime mortgage related losses the loss of his liberty,” US Attorney Preet Bharara said in a statement.
Serageldin was also sentenced to two years of supervised release and ordered to pay $1 million forfeiture, a $150,000 fine and a $100 special assessment.
David Higgs and Salmaan Siddiqui, who worked under Serageldin in the investment banking division of the Swiss bank, pleaded guilty in a New York court last year to one count of conspiracy to falsify books and records and commit wire fraud.
Each faces a maximum sentence of five years in prison and a fine of at least $250,000. They are still awaiting sentencing.
The defendants were charged with inflating the prices of asset backed bonds, which comprised subprime residential mortgage backed securities and commercial mortgage backed securities in Credit Suisse’s accounts.
Serageldin, Higgs and Siddiqui secured significant year end bonuses for themselves through the alleged fraud since bonus amounts were largely based on trading books’ profitability, officials said.