David Higgs, Falsifying Books, New York 2012

Former Credit Suisse Manager Sentenced for Falsifying Books

David Higgs, a former Managing Director in the Investment Banking Division of Credit Suisse Group, was sentenced to time served in a Manhattan federal court for his role in a scheme to hide more than $100 million in losses in a mortgage-backed securities trading book.

According to the U.S. Attorney for the Southern District of New York, Preet Bharara, Higgs pled guilty on February 1, 2012, to conspiracy to falsify the books and records of Credit Suisse.

The scheme, which took place from August 2007 through February 2008, involved artificially inflating the price of mortgage-backed securities to create a false appearance of profitability in Credit Suisse’s ABN1 trading book. The book, which was valued at approximately $5.35 billion, included various types of cash securities, including AAA-rated and non-AAA-rated cash bonds.

As the real estate market in the United States deteriorated, Higgs and his co-conspirators, including Kareem Serageldin and Salmaan Siddiqui, were aware that the market for mortgage-backed securities had declined enormously. Despite this, they continued to artificially inflate the prices of the securities, leading to a $2.65 billion write-down of Credit Suisse’s 2007 year-end financial result.

Higgs was sentenced by U.S. District Judge Alison J. Nathan on time served. The case is a reminder of the importance of transparency and accountability in the financial industry.

**MANDATORY FACTS**

**Defendant:** David Higgs

**Crime:** Conspiracy to falsify the books and records of Credit Suisse

**City and State:** Manhattan, New York

**Date:** February 1, 2012 (sentencing)

**Sentence:** Time served

**Amount:** $100 million (losses hidden in mortgage-backed securities trading book), $2.65 billion (write-down of Credit Suisse’s 2007 year-end financial result)

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