The area of securities regulation is complex. Accordingly, it makes sense that defending oneself against the criminal allegations of securities fraud would also be a complex endeavor. A New York man who formerly worked as a managing director at an investment banking firm is likely learning this firsthand.
The former trader was recently charged with a total of 16 counts related to allegedly defrauding more than $2 million from investment funds, including some created by the U.S Treasury Department. Of the 16 counts, 11 of them were for securities fraud. The securities involved in the alleged fraud were residential mortgage-backed securities. Other charges include fraud connected with the Troubled Asset Relief Program and making false statements to the federal government.
More specifically the 38-year-old is accused of:
- Misrepresenting the asking price of residential mortgage-backed securities
- Keeping the difference between the real and misrepresented price for the benefit of his employer
- Misrepresenting that certain bonds were being sold by a third-party seller who did not really exist
After his arrest the accused pled not guilty and was released after paying a $1 million bond.
Should the man be found guilty of the charges, he would potentially face a long prison term. This is because each of the 11 securities fraud charges could result in 20 years in jail. Multiplied by the 11 counts, that is more than 100 years behind bars total, and that does not take into account potential consequences for the other 5 non-security fraud charges.
The accused in this case clearly has a lot to lose. Accordingly he is likely aware of the importance of mounting a vigorous defense. Working with a lawyer who understands the complexities of such cases is vital to such a defense.
Source: Bloomberg, "Ex-Jefferies Trader Litvak Arrested for Securities Fraud," Chris Dolmetsch & Zeke Faux, Jan. 28, 2013