LONDON -- A British court on Monday approved the extradition of a former Credit Suisse trader to the United States, where he is accused of inflating the prices of subprime mortgage-backed bonds to the tune of $540 million in 2007-2008.
The case of Kareem Serageldin will now be sent to Home Secretary Theresa May, the interior minister, who under British law has the final say. She is expected to give the green light for the extradition to take place.
Serageldin, 39, the Swiss bank's former global head of structured credit, is accused of artificially inflating the prices of mortgage-backed bonds between August 2007 and February 2008, when the U.S. subprime housing market was collapsing and the bonds were losing value at an alarming rate.
According to the U.S. indictment against him, Serageldin devised the scheme to "enhance his apparent job performance" because he wanted a larger bonus and he knew he was in line for a big promotion.
Before the price manipulation came to light, Credit Suisse awarded him a bonus worth $7 million for his 2007 performance, of which $1.7 million was in cash and $5.3 million in Credit Suisse shares. The bank subsequently took the shares back.
Two of Serageldin's former colleagues who reported to him at the time, David Higgs and Salmaan Siddiqui, pleaded guilty in a U.S. court in February of last year to charges of conspiracy to commit wire fraud and falsify books and records.
The case was the first successful U.S. prosecution of employees of a major bank over wrongdoing connected to the subprime meltdown.
Westminster Magistrates' Court in London heard that Serageldin was facing two counts, the more serious of which carried a maximum penalty of 20 years in jail.
Serageldin's British lawyer, Ben Brandon, had previously told the court that the ex-trader was close to reaching a plea agreement with the U.S. Department of Justice, but at Monday's hearing he made no mention of this.
Brandon declined to comment to reporters on the status of Serageldin's negotiations with the department. The ex-trader's U.S. lawyer, Sean Casey, was not immediately available for comment.
In court, Serageldin did not contest his extradition, which was approved by judge Quentin Purdy.
Under Britain's extradition procedures, May will issue her decision between four weeks and two months from now. Serageldin remains free on bail until then, subject to an electronically monitored curfew.
The U.S. investigation into events at Credit Suisse stemmed from a $2.65-billion writedown on the value of asset-backed securities announced by the bank in March 2008. According to U.S. legal documents, $540 million of that was attributable to price manipulation by Serageldin and his co-conspirators.
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