InvestmentsMortgage

Mortgage bond trader Jesse Litvak convicted of fraud, again

Found guilty on one count after Appeals Court tossed conviction on 10 counts

The tale of Jesse Litvak may finally be moving toward an ending, as a federal jury on Friday found the former Jefferies managing director and mortgage-backed securities trader guilty on one count of fraud.

This is the second time that Litvak has been found guilty of defrauding customers in MBS trades.

More than two years ago, a jury sentenced Litvak to two years in prison for lying to clients about mortgage-backed securities.

That sentence stemmed from the March 2014 conviction of Litvak, who was found guilty of 10 counts of securities fraud, one count of defrauding TARP, and four counts of making false statements within the jurisdiction of the United States government.

But, Litvak successfully fought the ruling, with an appeals court tossing his convictions because Litvak wasn’t allowed to bring expert witnesses to testify on this behalf.

The government pursued the charges against Litvak earlier this year, but this time was only able to secure a guilty verdict on one count.

Bloomberg has the details:

On the sixth day of deliberations Friday, a federal jury in New Haven, Connecticut found Litvak guilty of one count of securities fraud following a trial that began Jan. 4. He was acquitted of nine counts.

The case has been closely watched by bond traders. While Litvak admitted lying to customers, his lawyers argued during both trials that his misrepresentations weren’t important enough to his counterparts to influence their decisions to buy or sell bonds. Litvak’s first conviction, in which he was found guilty on all 15 counts, was reversed on appeal in December 2015.

The appeals court ruled Litvak should have been allowed to present expert witnesses to bolster his defense. At the retrial, Litvak’s attorney offered one expert witness to explain that bond traders are sophisticated market professionals backed by substantial research capabilities and are likely to be skeptical about statements made about pricing during negotiations.

Litvak now awaits sentencing on his one guilty count.

For more from Bloomberg, click here or below.

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