Don't lie about debt prices or you could end up in jail. And if you've already lied, watch out.

That's the message to traders in the US$375 billion opaque market for collateralized loan obligations (CLOs) after Matthew Katke, a former Royal Bank of Scotland Group Plc CLO trader, pleaded guilty Wednesday in the U.S. to committing securities fraud. Katke agreed to cooperate with federal prosecutors' investigation into a multimillion-dollar scheme to cheat customers who bought and sold bonds.

While investigators have been scrutinizing the activities of several mortgage-bond traders since the credit seizure of 2008, their latest action shows they've also been focusing on a market that's tried to distance itself from debt backed by home loans that spurred the crisis. CLOs, which slice pools of speculative-grade corporate debt into pieces of varying risk and return, have been issued at an unprecedented clip during the past few years.