It's not epic, but it's something.

February 1, 2012 8:39 PM

3 Ex-Traders at Credit Suisse Charged With Bond Fraud. However vicarious, unworthiness and tenuous the victory, perhaps it is in order for a little vindication of the world's defrauded public.
posted by gagglezoomer (11 comments total)

Feds Dust off Old Rogue Traders CDO Case to Burnish “Tough on Mortgage Crime” Credentials
posted by T.D. Strange at 8:52 PM on February 1

The SEC's factsheet on enforcement actions from the financial crisis
posted by H. Roark at 8:54 PM on February 1 [1 favorite]

I will not be satisfied until I see the convicted perpetrators in stocks in Union Square Park.
posted by Danf at 9:01 PM on February 1

I'm in no way defending their actions, but it is indeed difficult to find the "right price" for big illiquid securities. If you want to sell your car and go to the auto lot and they say 'your car is worth $100 bucks', does that make it worth 100 bucks? you might be tempted to go to kellybluebook.com, and find that magic price that cars never really seem to sell for. august of 2007 was a really really shitty time for cdo's and leveraged finance in general, in many ways worse so then before the stock market fell out of bed in 2008, and it would not surprise me in the least if these guys honestly thought their pieces of crap were worth more then the quotes they were getting from the street.
posted by H. Roark at 9:02 PM on February 1

Can't agree more with the last line of the link from T.D.Strange. The TSA is not the only agency that puts on a good show of "security" theater.
posted by webhund at 9:04 PM on February 1

Still nothing done to help actual home owners.
posted by empath at 9:04 PM on February 1

Still nothing done to help actual home owners.

Surprise surprise!
posted by flapjax at midnite at 9:05 PM on February 1

"it would not surprise me in the least if these guys honestly thought their pieces of crap were worth more then the quotes they were getting from the street."

If they had waited more than ... ONE FRIGGIN' MINUTE, then they might be able to make that argument. From the OP:

After learning that the marks at Deutsche Bank and Barclays Capital were substantially lower than their own marks, they looked elsewhere. Mr. Siddiqui, the junior trader, subsequently secured sham “independent” marks from a friend who worked at a small investment bank. “In less than a minute, Mr. Siddiqui’s friend generated prices on a number of AAA bonds that were nearly identical to those recorded by Mr. Siddiqui and his conspirators,” the government said.

Greedy and clumsy is not a good combination.
posted by webhund at 9:10 PM on February 1 [1 favorite]

This is 'something' I guess. Seems like a pretty flimsy post though.
posted by panaceanot at 9:21 PM on February 1

If convicted, the traders face sentences ranging anywhere from civil penalties and probation to the comfy chair, staying in there until lunch time with only something from the vending machine.
posted by crapmatic at 9:27 PM on February 1

Heh, what's funny here is that they're being penalized for something that was made legal, some time after they did it.

For awhile, banks were expected to 'mark to market', to value securities at the present market value for them. During the crisis, many of the securities were valueless, because they were illiquid. (most of them are, fundamentally, worth MUCH less than the notional value.) So, because being honest about valuations would have destroyed the banks, the rule was changed, so that now banks can mark to whatever they think the security is worth -- aka, "mark to fantasy".

So, what these guys are charged with doing? If they did it right now, as far as I know, it'd be legal. Banks can say these securities have whatever value they want. These poor bastards just made the mistake of being greedy and corrupt before the government said it was okay to be greedy and corrupt.
posted by Malor at 9:32 PM on February 1