SEC, former Nomura trader continue settlement talks
The United States Securities and Exchange Commission (SEC) continues its settlement talks with former Nomura trader Michael A. Gramins, according to a status report filed by the regulator in the New York Southern District Court on September 23, 2021.
The document, seen by FX News Group, provides a status update on the criminal and civil cases against defendant Michael Gramins.
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.
Since the last status report, the parties agreed to defer Mr. Gramins’ request for a meeting with senior officials in the SEC’s Enforcement Division pending the exchange of settlement positions and related discussions. This exchange of information did not result in resolution of this matter and Mr. Gramins recently renewed his request for a meeting with Enforcement Division officials.
The parties believe that it would be most efficient to first determine whether further settlement discussions bear fruit before reopening discovery.
With respect to the criminal case against Mr. Gramins, his appeal to the Second Circuit remains pending, as does the Government’s motion for restitution before Judge Chatigny.