Credit Suisse had implemented a system in August 2007, whereby the firm's trading desks were required to produce "flash" reports of P&L movements on real time systems. "In light of this enhanced scrutiny of their bonds, Defendants Serageldin and Higgs were placed under intense pressure to avoid showing negative P&L," said the SEC in its complaint, filed in a Lower Manhattan court.
A month later, during a phone conversation a trading assistant in the team said to Serageldin: "If you want [profit and loss] to be a big number let me know what you want, then I'll just go through it with [Higgs] because obviously I can move things back to where they were ... if you're looking for a big number today...".
The conversation was easily retrieved by lawyers and investigators because Credit Suisse recorded UK trader phone conversations to a system as part of its business policy.
"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 of the market and above the law," said Manhattan US Attorney Preet Bharara - who famously put Galleon founder Raj Rajaratnam behind bars - as he filed the charges.
"As alleged, they papered over more than a half billion dollars in subprime mortgage-related losses, to secure for themselves a big payday at the same time that many people were losing their homes and their jobs."
The bonuses and share incentives were potentially worth millions of dollars for each individual.
Higgs and Siddiqui face up to five years in prison. Serageldin, if convicted, faces five years in prison on the conspiracy count, and a maximum sentence of 20 years in prison on each of the books and records and the wire fraud counts, as well as a $5 million fine.
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