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Brokers Target of Criminal Investigation in ARS Scandal

By Mark H. Astarita, Esq.

First the State of Mass. went after UBS. Now Federal prosecutors are investigating whether two former Credit Suisse Group brokers lied to investors about how they placed their money into short-term securities.Obviously the ARS issue is a hot topic, but I am concerned at the attempt to criminalize the conduct of individual brokers, when it appears that the ARS marketplace was as close to a fraud as one could imagine. Just read the emails that are attached to the UBS Complaint annd it becomes clear, assuming of course that the emails are accurate, that 1)the firms knew that the ARS market was collapsing in late 2007, and 2) they pushed brokers to move the securities out of the firm's inventory to its retail customers.It is quite a stretch to hold the retail broker liable for the ARS debacle, as brokers are relying on their firms for the details of the securities that they sell...continue to full post

Full post as published by SECLaw.com on July 14, 2008 (boomark / email).