WASHINGTON — Federal regulators are accusing two Wall Street brokers of defrauding their customers by making more than $1 billion in unauthorized purchases of securities tied to subprime mortgages.
The Securities and Exchange Commission alleges in a civil lawsuit that two Credit Suisse Securities brokers led corporate customers to believe that auction-rate securities being purchased in their accounts were backed by federally guaranteed student loans and were safe like cash.
The SEC says the securities were backed by subprime mortgages, collateralized debt obligations and other high-risk investments. The agency is seeking unspecified restitution and fines.
