A former Cantor Fitzgerald trader was charged with defrauding customers by lying about prices of mortgage-backed securities, becoming the latest target of a U.S. crackdown on deceptive practices in the bond market.
Bloomberg News reports that David Demos, 35, of Westport, Connecticut, is accused of falsifying prices at which his firm bought residential mortgage-backed bonds to get customers to pay more, and misrepresenting transaction prices to induce clients to sell the bonds for less, prosecutors said.
The case is at least the sixth in three years in which bond traders faced criminal charges over sales practices. The crackdown, which has led to the departure of more than 20 traders from banks, began with the arrest of former Jefferies managing director Jesse Litvak in January 2013. Litvak, who argued his misrepresentations weren’t material to customers because they believed the bond prices were fair, was found guilty of fraud in March 2014. His conviction was thrown out on appeal and his retrial is scheduled to start next month.
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