After hiring a law firm to investigate perhaps $80 million of losses in its mortgage trading division, Credit Suisse First Boston immediately moved to reorganize its operations with the appointment of three mortgage executives - Andrew Kimura, Michael Marriott and Ben Aitkenhead - to oversee its mortgage and structured-product business. The move aims to revamp the mortgage group by combining ABS, CMBS and RMBS units, across its risk, sales and trading operations.
The move follows the abrupt departure of Matthew Ruppel, co-head of CSFB's mortgage trading division (he was promoted sometime in mid-November), who left two weeks ago amid the investigation into what could add up to $80 million in losses incurred in November. At CSFB since 1999, Ruppel is credited with helping boost his division's revenues to around $400 million in 2001 and 2002, according to press reports.
Kimura, who had been Ruppel's co-head, comes from the RMBS side of the business; Marriott, from ABS and CMBS; and Aitkenhead already ran the sales force for the structured products group.
Indeed, Ruppel left after one of CSFB's mortgage traders, Rasekh Huq, lost from $25 million to $27 million on a mortgage trade last month, according to press reports last week. Another trader under Ruppel, Aamer Abdullah, lost $50 million trading in late October, the reports said. Abdullah recently defected to Deutsche Bank, and has not been accused of any wrongdoing.
Huq, however, who was still at the firm when this publication went to press Thursday, is under investigation regarding the trades, and is being accused of not disclosing the losses in a timely manner, according to The New York Sun, which originally reported the story. A spokesman from CSFB declined to comment. Investigators reportedly are questioning whether the losses, which were said to have been sustained in mortgage derivatives, were hidden in hopes that a market rebound would bail Huq out.
Huq has been at the firm for seven years and is highly regarded among peers. He is currently a director in the division with oversight responsibilities across several areas of the mortgage unit, including mortgage-derivative trading.