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Browse: Home / 2008 / September / 03 / SEC Charges Two Brokers With Fraud Related to $1 Billion in Sub-Prime Purchases

SEC Charges Two Brokers With Fraud Related to $1 Billion in Sub-Prime Purchases

By Securities Docket on September 3, 2008, 10:58 am

The SEC charged Wall Street brokers Julian Tzolov and Eric Butler today with defrauding customers when making more than $1 billion in unauthorized purchases of subprime-related auction rate securities.

The SEC alleges that the brokers misled customers into believing that the ARS were backed by federally guaranteed student loans and were a safe and liquid alternative to bank deposits or money market funds. The SEC claims that in fact, the securities in question were backed by subprime mortgages, collateralized debt obligations (CDOs), and other non-student loan collateral.

In the SEC’s announcement of the charges, Andrew M. Calamari, Associate Director of the SEC’s New York Regional Office, stated that the case “demonstrates how the recent turmoil in the subprime market has affected even investors who had no intention of buying subprime securities.”

Read the SEC’s press release

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Posted in SEC | Tagged Subprime

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