Yesterday, two former Credit Suisse bond traders pleaded guilty to criminal charges of conspiracy in connection with the mortgage bond market that spiraled out of control in 2007-08, precipitating the mortgage crisis of 2008. As discussed on the Corporate Justice Blog Wednesday, federal prosecutors have been preparing charges against these traders for several years. Former Credit Suisse traders David Higgs (pictured, courtesy of Bloomberg) and Salmaan Siddiqui pleaded guilty to conspiracy to falsify books and records and to commit wire fraud charges while Credit Suisse supervisor Kareem Serageldin remains charged and resides currently in the U.K.According to the Wall Street Journal: "Federal prosecutors unveiled criminal charges against three former Credit Suisse Group AG employees, providing a window into the way traders allegedly invented inflated values for mortgage bonds during the financial crisis. Two of the three men pleaded guilty to criminal charges of conspiracy, admitting they attempted to conceal the scheme from managers in a bid to boost their bonuses.
The guilty pleas mark the first successful criminal case against Wall Street in relation to the financial meltdown. The case is a 'tale of greed run amok piggybacking on one of the worst economic dislocations our nation has ever experienced,' said Manhattan U.S. Attorney Preet Bharara. 'While the residential housing market was in free fall, and shock waves were reverberating throughout the economy, these defendants decided they were above the rules.'"
With these guilty pleas, the government has for the first time held parties accountable for some of the recklessness and fraud that permeated Wall Street during the run-up to the financial market crisis.
It's hard to believe that so few from the financial world have been held accountable.
ReplyDeleteIt's cases like this that make me proud to be in law school. So many friends make "lawyer jokes" and think that attorneys don't do any good in the world. But here, in the business setting, attorneys are holding criminals accountable for their actions. I applaud the federal prosecutors whose hard work was the catalyst for these guilty pleas.
ReplyDelete"The guilty pleas mark the first successful criminal case against Wall Street in relation to the financial meltdown." This is depressing considering it took four years to get one guilty plea. So, at this rate it should only take another 150 years before we successfully prosecute those responsible for the financial meltdown.
ReplyDeleteWe are supposed to have laws in place that curtail this type of activity. However, I guess this just goes to show that these guys have found loop holes in the systems that allow them to profit millions. The unfortunate thing about this story is how long it took for prosecutors to develop the case. As the article indicates "federal prosecutors have been preparing charges against these traders for several years." It should not take several years to prosecute investors when they get out of control. Instead, we need laws that let investors know right away that they are not above the law.