Ex-RBS Bond Trader Pleads Guilty as Bond Probe Widens

20 Jan 2016 | Author: | No comments yet »

Ex-RBS Bond Trader Pleads Guilty as Bond Probe Widens.

A former top trader at the Royal Bank of Scotland pleaded guilty in federal court in Connecticut on Monday to one count of conspiracy to commit securities fraud as part of the government’s investigation into Wall Street bond sales practices. Adam Siegel, 37, of Riverside, waived his right to indictment and pleaded guilty on Monday in Hartford federal court to participating in a multi-million securities fraud scheme. Adam Siegel’s plea is an indication that the government is continuing a crackdown on deceptive practices in the bond market even after an appeals court threw out the conviction of former Jefferies & Co. trader Jesse Litvak.

Daly, United States Attorney for the District of Connecticut, Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Patricia M. According to a news release, Siegel admitted that he and others conspired to increase RBS’s profits on residential mortgage-backed securities and collateralized loan obligations bond trades at the expense of customers. Siegel is the second RBS trader to plead guilty amid a probe by federal prosecutors in Connecticut into whether banks cheated their customers on prices of mortgage-backed securities. On Dec. 8 a federal appellate panel reversed a key and first conviction in the probe against Jesse Litvak, a former Jefferies Group Inc managing director who was found guilty in 2014 and sentenced to two years in prison. SIEGEL also entered into an agreement to cooperate in the government’s ongoing investigation According to court documents and statements made in court, between July 2008 and approximately 2014, SIEGEL was the Co-Head of U.S.

In certain transactions, Siegel and his co-conspirators misrepresented the seller’s asking price to the buyer (or vice versa), keeping the difference between the price paid by the buyer and the price paid to the seller for RBS. Litvak was charged with using the same tactics. “Current regulations governing many fixed-income products allow broker-dealers to operate in secrecy,” Daly said. “Broker-dealers do not have a license to lie to their customers.” Sieger was released on a $250,000 bond and is scheduled to be sentenced in March. The misrepresentations included telling certain buyers that bonds held in RBS’s inventory were being offered for sale by a fictitious third-party seller, which allowed RBS to charge the buyer an extra, unearned commission, Daly said. It said Litvak should have been able to present testimony from experts suggesting his tactics were common behavior on Wall Street, and ordered a retrial on charges that he cheated his customers by lying about the prices the firm paid for bonds.

SIGTARP Inspector General Romero said in a statement, “During the financial crisis, Adam Siegel exploited the lack of transparency in those markets by victimizing the firm’s customers, including TARP banks. On March 11, 2015, New York City resident Matthew Katke, a registered broker-dealer and managing director at RBS Securities Inc., pleaded guilty to the same charge and also is cooperating with the government. His crime included defrauding buying customers about the price his firm paid so that he could charge more, defrauding selling customers about the price a buyer was willing to pay, and lying that a bond his firm already held in inventory was actually being sold by a seller at an artificially inflated price. The traders also told customers who wanted to buy bonds that a fictitious third party was selling them, rather than telling them the securities were coming out of R.B.S.’s holdings.

Three former Nomura Holdings Inc. traders – Ross Shapiro, Michael Gramins and Tyler Peters – were arrested in September on similar charges, alleging they lied about how much they paid for debt in order to boost the spread on trades and earn an extra $7 million. Attorney Deirdre Daly has shown great leadership, and her office and the FBI have been united with SIGTARP against crime related to the bailout.” “Financial investors should not have to fear being deceived by brokers in an already risk-filled industry,” said FBI Special Agent in Charge Ferrick. “The criminal actions of Mr. RBS announced plans last year to cut hundreds of jobs and shut down the mortgage business of that unit while placing more focus on its home U.K. markets. RBS’s usual customers for structured products were investment advisers and hedge funds investing on behalf of entities such as pension funds, charitable endowments and insurance companies.

The RMBS Working Group brings together attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, U.S.

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