Felons get to keep Morgan Stanley bonuses

[unhappycamper]

Felons get to keep Morgan Stanley bonuses
August 11, 2010, 4:10 pm

The brokers are Julian Tzolov and Eric Butler. They came to minor fame two years ago, when the Securities and Exchange Commission sued them for ripping off their customers to the tune of $1 billion in a subprime bait-and-switch scheme.

Since then, Tzolov pleaded guilty to securities fraud and is awaiting sentencing. He helped the Justice Department in its case against Butler, who was convicted of securities fraud and faces five years in jail (though he is out on bail during his pending appeal).

It could have been worse, though. An arbitration panel run by the Financial Industry Regulatory Authority has ruled that neither man will have to repay Morgan Stanley (MS) for the signing bonuses they got three years ago when they jumped ship from Credit Suisse, where all the subprime wrongdoing occurred.

Tzolov and Butler each got a $4.5 million loan from Morgan Stanley when they signed on in September 2007. The Wall Street Journal notes that brokers jumping ship typically receive "a bonus that is often equal to roughly twice the revenue they generated over the past year at their prior firm."

And what a bargain that turned out to be for Morgan Stanley. Just a year after it hired them for the low, low price of $9 million, the SEC sued the two, saying they conspired to defraud investors in so-called auction rate securities – one of the first casualties of the credit meltdown.

[Quantess]

1. Assholes. (no text)

[hobbit709]

2. They should forfeit all their assets.

If it's good enough under the drug laws, then it's good enough for everyone else too

[RedCloud]

3. "Just us" ruling for the rich.