Ex-Jefferies employees in the spotlight

Gavel

Former Jefferies Managing Director Jesse Litvak defrauded investors of $2m using a U.S. bank bailout program to earn illegal profit for the firm, prosecutors said at the start of his trial.

Litvak 'was not truthful with his clients', Assistant U.S. Attorney Eric Glover told a federal jury earlier this week in New Haven, Connecticut, during his opening statement. 'They trusted him. He secretly pocketed the difference for himself and his firm'.

Bloomberg reports that Litvak is the only person charged with fraud in connection with an initiative to distribute more than $20 billion from the Troubled Asset Relief Program, or TARP, which used bailout funds to spur investment in mortgage-backed securities issued before 2009 that remained on the books of financial institutions. He’s accused of misrepresenting how much sellers were asking for the securities, or what customers would pay, keeping the difference for Jefferies.

Litvak pleaded not guilty after being charged.

Ex-Jefferies Director Faces Jury as U.S. Levels Fraud Claims

In the meantime, Reuters reports that a divided federal appeals court on Tuesday strengthened the U.S. Securities and Exchange Commission's ability to recover insider trading profit from people who do not personally benefit directly from their alleged illegal trades.

By a 2-1 vote, a panel of the 2nd U.S. Circuit Court of Appeals in New York said former Jefferies portfolio manager Joseph Contorinis must give up $7.26m of alleged illegal profit that he made for the firm's Paragon Fund, plus $2.42m in interest, in an SEC civil forfeiture case.

Ex-Jefferies manager loses appeal in SEC insider trading case

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