Federal prosecutors are attempting to convict former Jeffries trader Jesse Litvak for the second time with securities fraud charges after his original 2014 conviction was overturned on appeal to the Second Circuit.
Litvak was convicted for letting bond buyers and sellers think his firm was making less than it actually was on certain transactions, which led to a $2 million profit for the firm. His conviction was overturned in December, as the court tossed charges that he defrauded the Treasury Department’s Troubled Asset Relief Program (TARP), setting up the current retrial on charges that he broke criminal securities laws when dealing with asset managers.
Litvak’s trades involved the now-infamous residential mortgage-backed securities – home loans that were bundled together and sold to investors. According to the U.S. Attorney’s Office, only broker-dealers knew the true prices of the residential mortgage-backed securities bonds, while buyers and sellers relied on what their broker-dealers told them.
Litvak is accused of padding his costs, keeping investors clueless. Litvak’s attorney stated that he had no obligation to act in the best interests of the companies he sold distressed residential mortgage-backed securities to, likening his statements to what a salesman might say on a used car lot.
His attorney also argued that the asset managers on the other side of the trades were sophisticated investors who have access to proprietary computer programs and teams of researchers to help them make trading decisions.
In at least one instance, a former client found out about the alleged secret profit margins “padded” by Litvak upon receiving an accidental email containing an internal spreadsheet.
Call a Los Angeles Securities Fraud Attorney Today
If you invested through Jeffries trader Jesse Litvak, or have suffered a loss after purchasing residential mortgage-backed securities, you may have certain legal rights that require your immediate attention.
Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.