An investment-fund manager who claims he was shortchanged by traders lying about mortgage-bond prices admitted he used the same tactic under certain circumstances.
"I may make the choice of lying to that person if I thought it was protecting my clients’ interest," former Putnam Investments LLC portfolio manager Zachary Harrison testified at the trial of three former Nomura bond traders.
Bloomberg News reports that during four days on the stand, Harrison explained how he researched securities before deciding whether to trade by plugging data such as housing prices and delinquency rates into analytical models. But under cross-examination from lawyers for the accused traders, Harrison admitted he also had lied during negotiations and engaged in trading practices that some consider unacceptable, one of which got him fired.
The Nomura trio, Ross Shapiro, Michael Gramins and Tyler Peters, are in federal court in Hartford, Connecticut, accused of lying to clients about bond prices and training their subordinates to do the same. They are among a handful of traders who have been criminally charged with deceiving customers as part of a crackdown that began with the indictment of ex-Jefferies managing director Jesse Litvak in 2013.
Hit the link below to access the complete Bloomberg News article: