Ex-Credit Suisse Group Broker Gets Five Years
The verdict for Eric Butler is five years in prison for fraudulently selling risky auction-rate securities that ended up costing investors more than $1.1 billion in losses. The ex-Credit Suisse broker also was fined $5 million.
Butler was convicted of securities fraud and conspiracy to commit securities fraud back in August. At the time, prosecutors were seeking a 15-year prison sentence.
One month earlier, Butler’s partner - Julian Tzolov - pleaded guilty to fraud, conspiracy charges and bail-jumping after previously fleeing the country. His sentencing is set for April 27, 2010.
Prosecutors in the case accused Butler and Tzolov of trying to take in bigger commissions by convincing clients they were investing in safe, conservative securities backed by federally guaranteed student loans. The scheme began to backfire in the fall of 2007 as auctions for the investments started to fail.
Institutional investors in particular suffered millions of dollars in losses as a result of the former brokers’ actions. Among the companies affected: STMicroelectronics NV (which later sued Credit Suisse and was awarded $406 million by the Financial Industry Regulatory Authority), Potash Corp of Saskatchewan Inc. and Roche Holding AG.
The case against Butler marks one of the first criminal prosecutions related to the credit crisis.
