David Hoffman
Federal prosecutors are investigating whether two former New York-based brokers with Credit Suisse Group of Zurich, Switzerland, lied to investors when they put their clients into auction rate preferred securities, according to a report in today’s Wall Street Journal.
Eric Butler and Julian Tzolov resigned from Credit Suisse on Sept. 7 amid accusations by clients that they were misled about the auction rate securities they bought, the paper said.
The probe, by the United States Attorney's Office for Eastern District of New York, marks the first time a possible criminal matter has stemmed from auctions of preferred securities, which began to fail in February.
Credit Suisse isn't a target of the investigation, people familiar with the matter told the paper.
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