SEC, former Nomura trader close to agreeing on potential resolution of fraud case
The United States Securities and Exchange Commission (SEC) has provided a status update to the Court regarding its case targeting former Nomura traders Ross Shapiro, Michael Gramins, and Tyler Peters.
As FX News Group has reported, the Commission and one of the defendants – Michael Gramins, have been engaged in settlement talks for several months.
According to a document filed by the SEC in the New York Southern District Court on November 22, 2021, the settlement talks continue. The SEC explains that, while the parties do not yet have a settlement in principle to propose to the Court, and the staff would still need to seek authorization from the Commission to settle on any terms eventually agreed upon, the parties believe that they are close to agreeing upon a structure for a potential resolution.
Another status report is expected not later than December 22, 2021.
Let’s recall that, in December 2020, Gramins was sentenced to two years of probation for defrauding mortgage-backed securities customers of Nomura Securities International, where he was employed. Judge Chatigny also ordered Gramins to perform 300 hours of community service.
According to the evidence presented during his trial, Gramins was an Executive Director on the Residential Mortgage Backed Securities (“RMBS”) Desk at Nomura Securities International (“Nomura”) in New York where he principally oversaw Nomura’s trading of bonds composed of sub-prime and option ARM loans. Between 2009 and 2013, Gramins and others defrauded customers of Nomura by fraudulently inflating the purchase price at which Nomura could buy a RMBS bond to induce their victim-customers to pay a higher price for the bond, and by fraudulently deflating the price at which Nomura could sell a RMBS bond to induce their victim-customers to sell bonds at cheaper prices, causing Nomura to profit illegally.
Gramins trained subordinates to lie to customers, provided them with the language to use in deceiving customers, and encouraged them to engage in the practice.
The victims of this scheme included hedge funds, insurance companies, and asset managers from Connecticut and elsewhere.
The SEC launched a lawsuit against Gramins, Peters, and Shapiro in September 2015. The Commission charged the three traders with fraud.
The SEC alleges that Ross Shapiro, Michael Gramins, and Tyler Peters defrauded customers to illicitly generate millions of dollars in additional revenue for Nomura Securities International, the New York-based brokerage firm where they worked. They misrepresented the bids and offers being provided to Nomura for RMBS as well as the prices at which Nomura bought and sold RMBS and the spreads the firm earned intermediating RMBS trades. They also trained, coached, and directed junior traders at the firm to engage in the same misconduct.