Two former Credit Suisse bankers have been charged with fraud for allegedly deceiving clients over the value of debt tied to sub-prime mortgages.
Julian Solov and Eric Butler are accused of selling "auction-rate securities" on the pretence they were as safe and risk-free as cash.
In reality, they were backed by high-risk investments and generated large commission payments for the duo.
The credit crunch froze the market for the securities, making them worthless.
Prosecutors claim the assets had been sold for up to $1bn.
The two men are facing criminal charges of securities fraud, wire fraud and conspiracy, which carry a maximum sentence of 25 years and fines of in excess of $5m.
They also face separate civil charges.
It is alleged the two told clients that the financial instruments were secured against student loans and other federally-backed collateral.
In fact, they were backed by sub-prime mortgages and collateral debt obligations, packages of debt whose high-risk trade helped to precipitate the credit crisis and cast a shadow over Wall Street in the past year.
'Prohibited activity'
Lawyers for the two men have yet to comment on the charges.
The FBI said the indictments reflected its determination to "police the securities industry to protect investors from all forms of unscrupulous and illegal conduct".
The Securities and Exchange Commission (SEC) said people with "no intention" of buying sub-prime assets had been caught in the alleged scam.
Credit Suisse suspended the two men last year after it discovered what it said was "prohibited activity" and the two subsequently resigned.
The bank said it promptly informed market regulators and has been co-operating with the investigation ever since.
BBC North America business correspondent Greg Wood says the case comes at a time when banks are having to pay back money lost on such securities in a string of regulatory settlements.
Merrill Lynch, Goldman Sachs and Citigroup are among leading banks to have agreed to buy back $50bn worth of auction-rate securities.
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