U.S. seeks to end criminal fraud case against bond trader Litvak
30/07/2018 21:11
By Jonathan Stempel
July 30 (Reuters) - U.S. prosecutors on Monday moved to
dismiss their criminal fraud case accusing former trader Jesse
Litvak of lying to customers about bond prices, after two
convictions of the former Jefferies managing director were
overturned on appeal.
In a motion filed with the federal court in New Haven,
Connecticut, U.S. Attorney John Durham said, "the interests of
justice would not be served by a third trial" of Litvak, given
the "totality of the circumstances unique to this case."
Both convictions resulted in two-year prison terms for
Litvak, 43, a married father of two. He had been serving his
sentence when the federal appeals court in Manhattan voided his
second conviction on May 3 and ordered him freed. urn:newsml:reuters.com:*:nL1N1SA185
Kannon Shanmugam, a lawyer who handled Litvak's appeals,
declined to comment.
The dismissal request is a defeat for the government, which
has failed to sustain any convictions in its 5-1/2-year
crackdown on suspicious sales tactics on Wall Street, which
began in January 2013 when Litvak was charged.
Prosecutors accused Litvak of lying to customers including
AllianceBernstein, Invesco and Soros Fund Management, causing
them to overpay for bonds they bought and accept lower prices
for bonds they sold.
They said Litvak did this to generate $2.25 million of extra
profit for Jefferies, now part of Jefferies Financial Group Inc
JEF.N , and to boost his own pay.
Defense lawyers argued that Litvak's customers were
sophisticated and would have known if he lied.
The defendant was found guilty in March 2014 on 10
securities fraud counts and other charges, but the appeals court
overturned that verdict in December 2015, saying the trial judge
wrongly excluded expert testimony for the defense.
Litvak was convicted on a single fraud count at a January
2017 retrial. The appeals court found that verdict tainted by
the admission of irrelevant evidence.
At least five people have been tried in the government's
probe.
Two were acquitted, Litvak and former Nomura Holdings Inc
8604.T trader Michael Gramins had their convictions set aside,
and former Nomura trader Ross Shapiro was acquitted on all but
one count, where jurors deadlocked. urn:newsml:reuters.com:*:nL1N1JC1QN
The cases against Gramins and Shapiro remain pending.
Jefferies in 2014 agreed to pay $25 million to resolve U.S.
criminal and civil probes into how it supervised Litvak and
other traders.
The case is U.S. v. Litvak, U.S. District Court, District of
Connecticut, No. 13-cr-00019.
(Reporting by Jonathan Stempel in New York; editing by Bill
Berkrot)
((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))