The boom in short selling (short selling news) prior to the financial crisis led to a fairly severe shortage of stock to be loaned, which gave rise to a rough-and-tumble cottage industry on Wall Street that seemed at times almost Mafioso. Stock loan finders flourished, and they were held almost immediately in ill-repute by many.

Prosecutors have just charged an employee of Morgan Stanley (MS) and Bank of America (BAC)with accepting cash kickbacks (kickbacks news) from a finder, Clinton Management, in return for sending orders to other brokerages. These other brokerages paid fees to Clinton Management for finding securities to be borrowed and loaned, according to Reuters.

The trader Salvatore Zangari is charged with taking up to $150,000 in cash payments, some of which he used for a down payment on real estate. He becomes at least the second former Morgan Stanley trader to be charged. The complaint says he cheated his firm by arranging stock loan deals with an eye on generating personal profits and fees for Clinton rather than with an eye on maximizing profit for his firm. More charges may be coming against others, as prosecutors have had their eyes on this for a while. 

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