bw.gifCredit Suisse First Boston's mortgage-backed securities trading desk is lighter in its wallet and its workforce. The firm reportedly is investigating a loss of $40-50 million in its MBS book and a CSFB official confirmed management is in discussions with Mike Flannelly, a whole loan trader, concerning losses he apparently incurred. Flannelly, who did not return calls, has been moved off the desk while management performs a forensic check of his trading activities. Andy Kimura, co-head of the firm's structured products group, would not comment and John Gallagher, a spokesman, also declined to comment. The news was first reported March 17 on www.bondweek.com.
Meanwhile, in moves unrelated to the losses, two of CSFB's mortgage-backed traders quit last week and are planning to join Lehman Brothers. John Scelsa, a director and mortgage options trader, starts as a senior v.p. at Lehman next month, according to Jeff Michael, managing director and head of interest-rate options trading. Scelsa, who was vacationing in Florida last week, confirms the move. Also headed to Lehman next month, after a vacation to India, is Vinod Rathore, formerly a v.p. and whole loan trader on the MBS desk at CSFB. He declined to comment and Scelsa would only confirm his move.
