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Former Credit Suisse trader Serageldin arrested in Britain Former Credit Suisse trader Serageldin arrested in Britain
(35 minutes later)
A former Credit Suisse executive wanted in the US on fraud charges linked to distorting the value of mortgage securities during the financial crisis has been arrested in Britain.A former Credit Suisse executive wanted in the US on fraud charges linked to distorting the value of mortgage securities during the financial crisis has been arrested in Britain.
Kareem Serageldin, 39, will appear at Westminster magistrates court on Thursday for the start of extradition proceedings. Scotland Yard has confirmed he was taken into custody on Wednesday. Kareem Serageldin, 39, will appear at Westminster magistrates court in London on Thursday for the start of extradition proceedings. Scotland Yard has confirmed he was taken into custody on Wednesday.
US prosecutors have alleged Serageldin conspired with two of his employees to hide the deteriorating condition of the housing market in 2007 in order to keep the value of bonds based on subprime mortgages artificially high, thereby boosting their bonuses. US prosecutors have alleged Serageldin conspired with two of his employees to hide the deteriorating condition of the housing market in 2007 in order to keep the value of bonds based on sub-prime mortgages artificially high, thereby boosting their bonuses.
He was set to receive more than $7m (£4m) in compensation in 2007 before the company learned about the alleged scam and withheld $5.2m of his pay. The fraud, which prosecutors described earlier this year as "a tale of greed run amok", was blamed as responsible for a portion of the $2.65bn write-down Credit Suisse announced in March 2008.He was set to receive more than $7m (£4m) in compensation in 2007 before the company learned about the alleged scam and withheld $5.2m of his pay. The fraud, which prosecutors described earlier this year as "a tale of greed run amok", was blamed as responsible for a portion of the $2.65bn write-down Credit Suisse announced in March 2008.
Serageldin, Credit Suisse's former managing director and global head of structured credit, has been charged with conspiracy, falsifying books and records, and wire fraud in the US. The charges carry a potential penalty of 45 years in prison. Serageldin, its former managing director and global head of structured credit, has been charged with conspiracy, falsifying books and records, and wire fraud in the US. The charges carry a potential penalty of 45 years in prison.
Two other Credit Suisse traders pleaded guilty to conspiracy charges in co-operation deals with prosecutors in February. At the time, US prosecutors urged Serageldin, an American citizen living in England, to return to answer the charges against him. Two other Credit Suisse traders pleaded guilty to conspiracy charges in co-operation deals with prosecutors in February. At the time, US prosecutors urged Serageldin, an American citizen living in the UK, to return to answer the charges against him.
The subprime mortgage crisis fuelled the financial meltdown in 2008 that pushed the US into the most severe recession since the great depression of the 1930s. The sub-prime mortgage crisis fuelled the financial meltdown in 2008 that pushed the US into the most severe recession since the great depression of the 1930s.
US regulators have brought civil charges against several large Wall Street firms accused of misleading investors about securities linked to risky mortgages in the years leading up to the financial crisis. The biggest settlement of the Securities and Exchange Commission's charges was with Goldman Sachs in July 2010 when the firm agreed to pay $550m.US regulators have brought civil charges against several large Wall Street firms accused of misleading investors about securities linked to risky mortgages in the years leading up to the financial crisis. The biggest settlement of the Securities and Exchange Commission's charges was with Goldman Sachs in July 2010 when the firm agreed to pay $550m.
Most of the government's cases related to banks' handling of mortgage securities in the runup to the financial crisis have been civil proceedings. All the cases have involved complex investments called collateralised debt obligations – securities that are backed by pools of other assets, such as mortgages.Most of the government's cases related to banks' handling of mortgage securities in the runup to the financial crisis have been civil proceedings. All the cases have involved complex investments called collateralised debt obligations – securities that are backed by pools of other assets, such as mortgages.