The US Securities and Exchange Commission (SEC) has charged Jesse Litvak, former managing director of Jefferies & Co, for deceiving investors while selling mortgage-backed securities (MBS) during the 2008 financial crisis.
As per the SEC’s complaint filed in a federal court in Connecticut, Litvak working on the MBS desk at New York-based broker-dealer executed trades for customers to book additional revenue for the firm.
As part of his duty, Litvak was accountable for fair buying and selling of MBS to customers, but he deceived them by building an imaginary seller to claim that an MBS trade arrangement between customers was made, when actually he was just selling MBS out of his firm’s inventory at a higher price.
The market watchdog alleged that Litvak generated over $2.7m in extra revenue for Jefferies during 2009 to 2011, and also received better bonuses for his performance.
SEC enforcement division deputy director George Canellos said, "Brokers must always tell their customers the truth, particularly in complex securities transactions in which it is difficult for investors to determine market prices on their own."
The complaint charges Litvak with breaching the antifraud provisions of the federal securities laws.