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Ex-Stamford Trader Gets 2 Years In Prison, Fined $2M, For Securities Fraud

A former Stamford broker was sentenced to two years in prison for securities fraud on Wednesday.
A former Stamford broker was sentenced to two years in prison for securities fraud on Wednesday. Photo Credit: File

STAMFORD, Conn. -- A former Stamford securities trader was sentenced to two years in prison and fined $2 million for engaging in fraudulent residential mortgage-backed securities (RMBS) trades on Wednesday, according to U.S. Attorney for the District of Connecticut Deirdre M. Daly.

Jesse C. Litvak, 42, of Boca Raton, Fla., was a senior trader and managing director at Jefferies & Co, Inc. and worked on its trading floor in Stamford.

As a broker-dealer, only Litvak – not the bond seller or buyer – knew the selling and asking prices of the parties. Litvak exploited this information by misrepresenting to his Public-Private Investment Program fund victim the price Jefferies paid for a RMBS bond in order to increase Jefferies’ profit on the trade, the U.S Attorney said.

On March 7, 2014, Litvak was convicted after trial of 10 counts of securities fraud, one count of TARP fraud and three counts of making false statements to the government. Litvak appealed his conviction and, on Dec. 8, 2015, the U.S. Court of Appeals for the Second Circuit reversed the judgment of conviction and ordered a new trial.

On Jan. 27, a jury found LITVAK guilty of one count of securities fraud.

“This sentence sends an unequivocal message that fraud in the residential mortgage backed securities trading market will be met with serious punishment,”  Daly said in a statement. “Jesse Litvak took advantage of his victims through his repeated and brazen lies, and as the Court correctly found, Litvak’s lies led to more than $6 million in unearned profits for his employer. Simply put, Litvak lied to investors to cheat them and make more money for himself. This has been a demanding and lengthy prosecution. I thank our prosecutors and the SIGTARP and FBI agents for their tireless professionalism throughout this case. Our criminal investigations of individuals and institutions involved in fraudulent RMBS trading activities remain active and ongoing.”

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