Business

Bankers to pay the price for mortgage fraud

He was only following orders.

Salmaan Siddiqui, a former Credit Suisse mortgage bond trader who helped the bank hide more than $100 million in losses, was sentenced Wednesday to time served, and fined $150,000 — about 25 percent of his annual bonus.

The 39-year-old trader lied about the value of complex mortgage bonds that contributed to the financial crisis of 2008 — a move that made his work, along with that of his superiors look better than it was.

Siddiqui was not in prison, but for the last four years had his movements monitored by the Securities and Exchange Commission and the Department of Justice.

The fallen Credit Suisse star wasn’t the only banker to face the legal music Wednesday — former Countrywide Financial executive Rebecca Mairone was slapped with a $1 million fine for helping selling toxic mortgages.

Former trader Siddiqui, tall with a shaved head, claimed in court that he knew in 2007 and 2008 that he was committing a fraud.

“I should have refused,” he said before Judge Paul Crotty and a half-dozen friends and family members. “I wish I had the courage to stand my ground and say no.”

Kareem SerageldinReuters

Kareem Serageldin, Credit Suisse’s former global head of structured credit, ordered David Higgs, a managing director, to inflate the value of mortgage bonds, or collateralized debt obligations, in their portfolio — and Higgs in turn ordered Siddiqui to carry it out, the government had charged.

Higgs was also sentenced to time served. Serageldin was sentenced to 30 months in prison and is serving his time at the Moshannon (Pa.) Valley Correctional Center.

Scheduled to be released in March 2016, Serageldin is one of the highest-ranking Wall Street executives to serve time for crimes committed during the financial crisis.

Lawyers for Siddiqui claim that he shouldn’t have had the entire fine levied because he was covering for someone else when he was mispricing the CDOs, and that he earned the rest through his regular trading job.

Both Ira Lee Sorkin, Siddiqui’s lawyer, and Siddiqui declined to comment at Manhattan federal court after the sentencing.