NEW YORK (AP) -- A former Wall Street broker pleaded not guilty Wednesday to charges he and a colleague duped investors into purchasing more than $1 billion in high-risk securities by making it look as though the trades were protected by the federal government.An indictment unsealed in federal court in Brooklyn said because the securities actually were tied to subprime mortgages, Eric Butler and Julian Tzolov stood to pocket higher commissions. The scheme was exposed when the subprime market collapsed.
"The defendants' fraudulent misrepresentations and bait-and-switch tactics saddled investors with unknown risks they did not bargain for," U.S. Attorney Benton Campbell said in announcing the case against the former Credit Suisse Securities brokers.
Butler, 36, was released on $2.5 million bond following his arraignment on securities fraud, wire fraud and conspiracy charges. The Bulgarian-born Tzolov, 35, was out of the country but expected to return and surrender on the same charges.
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