Ex-Credit Suisse trader pleads guilty in U.S. mortgage case

Fri Apr 12, 2013 6:40pm EDT
 
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By Bernard Vaughan

NEW YORK (Reuters) - A former Credit Suisse Group AG CSGN.VX trader pleaded guilty to a conspiracy charge on Friday in a U.S. criminal case relating to the alleged inflation of subprime mortgage bond prices.

Kareem Serageldin, the Swiss bank's former global head of structured credit, pleaded guilty to conspiracy to falsify books and records at a hearing in Manhattan federal court. He faces up to five years in prison, according to the U.S. Justice Department.

"I made a terrible mistake and I deeply regret my conduct," Serageldin, 39, told U.S. District Judge Alvin Hellerstein.

Prosecutors had accused the British citizen of artificially boosting the prices of subprime mortgage-backed bonds between August 2007 and February 2008, when housing and credit conditions were rapidly deteriorating.

Overall, the price manipulation by Serageldin and others contributed to Credit Suisse's taking a $2.65 billion writedown in its 2007 year-end results, according to prosecutors. Credit Suisse has not been accused of wrongdoing.

In a statement, Serageldin portrayed a period of intense pressure as the housing crisis spooked financial markets in 2007 and 2008. In late 2007, Serageldin said he discovered that a portfolio of securities he oversaw was marked much higher than it could have been sold at the time.

He said he joined the scheme to protect his reputation within the bank as other groups were losing money.

"There was a lot of market turmoil with the bank," he said.   Continued...

 
Former Credit Suisse Group AG trader Kareem Serageldin departs Manhattan Federal Court with his lawyer Sean Casey (L) in New York, April 12, 2013. Serageldin, the Swiss bank's former global head of structured credit, pleaded guilty to a conspiracy charge in a U.S. criminal case relating to the alleged inflation of subprime mortgage bond prices. REUTERS/Brendan McDermid