In early June, a federal jury in Hartford, CT found a former mortgage-bond trader guilty of fraud. Michael Gramins, formerly of Nomura Holdings Inc., was found guilty of conspiracy and cleared of six counts of fraud, while the jury deadlocked on his other two charges. Interestingly, his colleagues, Ross Shapiro and Tyler Peters, were also on trial for securities fraud, but Peters was acquitted of all charges. Shapiro was cleared of eight counts, and the jury deadlocked on one of his charges. Gramins faces a maximum sentence of five years in prison.

The trio was accused of lying to clients about the price of bonds. For example, the Noruma traders told a money manager that they paid 86 1/32 for a bond yet, in reality, the traders purchased the bond for 85 25/32, a slight difference in price used as a common negotiating tactic.

The case comes as a part of the United States government crackdown on illegal trading practices. U.S. prosecutors and the SEC are ramping up the prosecution of traders who “intentionally misrepresent the acquisition or sales price of a bond during negotiations,” as reported by Bloomberg. The increase in prosecution could impact the way traders have been conducting their businesses for years.

Defending yourself against securities fraud charges

Defense attorneys in the Nomura trial asserted that the lies the plaintiffs told were minor and that their clients were sophisticated enough to know that actual bond prices should be taken with a grain of salt. According to reports from Bloomberg, they said a lie is material only if it “significantly altered the total mix of information available to the reasonable investor in making an investment decision.” The defense argued that Nomura’s clients were savvy enough to understand how bond trading works and smart enough to make informed decisions.

Generally speaking, the prosecution in securities fraud cases must show you intentionally or recklessly misrepresented or concealed facts and that the investor suffered real monetary damages. The prosecution must show evidence that the trader lied through the presentation of text messages, emails, phone calls, and other hard evidence. In the Nomura case, the prosecutor failed to show proof that Shapiro and Peters engaged in illegal activity.

To protect yourself, you can use a defense such as the one the Nomura traders used, if applicable. You may also be able to show that you had no knowledge of prior rules or regulations, and did not know you were breaking the law. For example, in the Nomura trial, the junior traders claimed this is how they were taught that Nomura operated and, essentially, that they did not know any better. Every white collar case is unique and, as a result, the defense will vary.

The Sevierville white collar criminal defense attorneys at the Delius & McKenzie are well versed in defending our clients against unjust and unfair prosecution. We are on your side. If you or a loved one needs professional, hard-hitting legal representation, schedule a consult today by calling (865) 428-8780 or filling out our contact form. We provide comprehensive counsel to clients in Sevierville, Seymour, Gatlinburg, Pigeon Forge, Greeneville, Bristol, Johnson City, and Kingsport.