The US Securities and Exchange Commission has charged ten brokers with fraud over allegations that they falsely marketed investments in derivatives of mortgage-backed securities to retirees and others with "conservative investment goals".
In its complaint, the regulator contests that the brokers made millions of dollars in commissions and salaries while their clients were hit by millions of dollars in losses.
All ten of the accused worked for the California-based brokerage Brookstreet Securities, which has since gone bust.
The SEC alleges that the brokers "did not clearly define the risks" to investors before they put their money into high-risk collateralized mortgage obligations.
As a result, their clients were exposed to "substantial losses" when the subprime crisis began in October 2008, the watchdog said.
Robert Khuzami, director of the SEC's division of enforcement, said: "They disregarded their customers' needs and used deceptive and misleading tactics to enrich themselves at their clients' expense."
According to the SEC complaint, over 750 customers lost more than $36 million through the alleged fraud. Meanwhile, the ten brokers are said to have made over $18 million in pay and commissions.
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