| NEW YORK, June 24
NEW YORK, June 24 A former London-based Credit
Suisse Group AG trader was spared prison on Tuesday
over his role in artificially inflating subprime mortgage bond
prices, in one of the few U.S. criminal prosecutions stemming
from the financial crisis.
The former trader, David Higgs, who pleaded guilty in 2012
to a conspiracy charge, was ordered to forfeit $900,000 to the
government and pay a $50,000 fine by U.S. District Judge Alison
Nathan in New York.
According to the office of Manhattan U.S. Attorney Preet
Bharara, Higgs provided "extremely substantial assistance" after
agreeing to cooperate with prosecutors.
Another Credit Suisse trader, Salmaan Siddiqui, also pleaded
guilty in 2012 and is scheduled to be sentenced this month.
Higgs's former boss Kareem Serageldin, once Credit Suisse's
global head of structured credit, entered his own guilty plea in
April 2013 and was sentenced in November to 2-1/2 years in
Prosecutors said that Higgs's cooperation helped build a
case against Serageldin and may have encouraged Siddiqui to
They also credited Higgs, a UK citizen, for his
"extraordinary decision" to voluntarily meet with U.S.
authorities, waive extradition and travel to the United States
to plead guilty.
Prosecutors accused the three men of mismarking the values
of subprime mortgage-backed bonds between August 2007 and
February 2008, as housing and credit markets were in decline.
They said the effort was intended to bolster Serageldin's
reputation at the bank by portraying the trading book he oversaw
The price manipulation contributed to a $2.65 billion
writedown, though prosecutors said at Serageldin's sentencing
that his book was overstated by $100 million.
Credit Suisse was not charged and cooperated with
The case is similar to the prosecution of two former
JPMorgan Chase & Co traders, Javier Martin-Artajo and
Julien Grout, linked to a $6.2 billion trading loss centered on
their former colleague Bruno Iksil, nicknamed the "London
Prosecutors have said Martin-Artajo and Grout conspired to
mark positions in a credit derivatives portfolio at inflated
prices to hide hundreds of millions of dollars in losses.
Both men were indicted last September on charges including
securities fraud, wire fraud and conspiracy. They are considered
fugitives for refusing to face trial in the United States.
In April, a lawyer for Grout said he was discussing a bail
package with prosecutors that would enable his client, a French
citizen, to come to the United States. Martin-Artajo, who lives
in Spain, has been fighting extradition.
The case is U.S. v. Higgs, U.S. District Court, Southern
District of New York, No. 12-cr-00088.
(Reporting by Joseph Ax; Editing by Leslie Adler)