A former Credit Suisse broker testified on Thursday that he and his former business partner lied to corporate clients and sent them incorrect information in emails to cover up investments in risky debt, reported Reuters. In one of the first criminal prosecutions stemming from the credit crunch to go to trial, former broker Julian Tzolov told a jury that he and another broker, Eric Butler, told clients their securities were backed by government-guaranteed student loans, when in fact they were not. "We were doing it for two reasons: We were receiving higher commissions and couldn't get allocations on student loans," said Tzolov, seated in Brooklyn federal court in a gray suit two weeks after pleading guilty to securities fraud, wire fraud, conspiracy and bail jumping. Tzolov, 36, was called by the government as a witness in the trial of his onetime friend and business partner Butler, who has pleaded not guilty to an indictment of fraud in $1 billion worth of deals in mortgage-backed auction rate securities from 2004 to 2007. Butler's trial started on July 23 and Tzolov is detained awaiting sentencing. He pleaded guilty after he was arrested in Spain days before the trial.
