NEW YORK (Reuters) - Two traders who ran Nomura Holdings Inc’s (8604.T) commercial mortgage-backed securities desk were charged on Monday by the U.S. Securities and Exchange Commission with lying to customers about bond prices, to boost profit and their own bonuses.
The SEC said James Im and Kee Chan fraudulently generated more than $750,000 of profit beginning in 2010 by having on numerous occasions “deliberately misled and lied to customers” whose trades they handled.
This included making up “colorful but entirely fictitious exchanges” with customers on the other side of trades, and pretending they were negotiating to buy high-priced bonds that they had already bought at lower prices, the regulator said.
The SEC said Im, 40, of Tarrytown, New York, has not settled its civil case, and invoked his constitutional right against self-incrimination when subpoenaed for documents and testimony.
Chan, 46, of Manhasset, New York, agreed to pay $213,723, including a $150,000 civil fine, and accept a three-year industry ban to settle, without admitting wrongdoing.
Lawyers for Im and Chan did not immediately respond to requests for comment. Nomura spokeswoman Jennifer Will declined to comment.
Im and Chan were charged by the SEC as part of a federal crackdown on deceptive bond trading practices, overseen mainly by the office of U.S. Attorney Deirdre Daly in Connecticut.
Eight people have been criminally charged, including former Nomura traders Michael Gramins, Tyler Peters and Ross Shapiro, who went on trial last week in Hartford, Connecticut. Three of the eight are cooperating with prosecutors.
The first to be charged, former Jefferies Group managing director Jesse Litvak, was sentenced last month to serve two years in prison following his conviction.
Im left Nomura in December 2014 to work at Stifel Financial Inc (SF.N), his current employer, industry records show.
Chan left Nomura in June 2012, and worked at UBS Group AG (UBSG.S) from September 2012 until he was fired in February 2016 for being too slow to disclose Daly’s investigation into his trading at Nomura, the records show.
Stifel had no immediate comment. UBS spokeswoman Erica Chase declined to comment. Thomas Carson, a spokesman for Daly, also declined to comment.
The cases are SEC v Chan, U.S. District Court, Southern District of New York, No. 17-03605; and SEC v Im in the same court, No. 17-03613.
Editing by Bernadette Baum and Alistair Bell