Alexander Rekeda could be facing charges from the SEC as soon as this summer due to his involvement heading the creation of a collateralized debt obligation called Delphinus at Mizuho Financial, the Wall Street Journal is reporting.
In addition, the SEC could be pursuing charges against Mizuho and other involved parties. But the ironic twist in the tale is that this could turn into the second time Mizuho has been faced with legal issues related to Rekeda—Mizuho was once sued by Credit Agricole for bringing the bondsman onto its team in the first place:
The 37-year-old Ukrainian immigrant with a mathematics degree from Kiev State University was a highflier during the mortgage-bond boom. Mizuho lured Mr. Rekeda and his team in December 2006 from the Calyon investment-banking unit of Crédit Agricole SA. The French bank sued Mizuho for “covertly” poaching its staff, and the lawsuit was settled for an undisclosed amount.
As for the possible SEC action due to CDO creation, that’s a familiar charge which has been filed and settled (Goldman’s ABACUS fiasco, anyone?) for many banks by now. What stands out in this current situation is that one high-profile figure—Rekeda—may be charged, which could be a first in the SEC’s pursuit of cracking down on CDO creation leading up to the financial crisis. Typically, the bank itself has been the spotlight in past cases.
Rekeda received a Wells Notice from the SEC last October, essentially a warning that the agency is planning on filing charges against him. Charges for Rekeda could come by this summer, according to the WSJ.
As for Rekeda’s current whereabouts—he left Mizuho in 2008 after they shut down the group he was the head of, and went on to a gig at Guggenheim Partners. He left that firm last November.