NEW YORK (Reuters) – The U.S. Securities and Exchange Commission may pursue its civil lawsuit accusing a former senior trader at Nomura Holdings Inc of lying to customers about bond prices in order to boost profit and his bonus, a federal judge ruled on Monday.
U.S. District Judge Paul Oetken in Manhattan refused to dismiss SEC claims that James Im tried to overcharge customers on bonds, by using such tactics as inflating the prices Nomura paid, understating Nomura’s profit on trades and making up conversations in order to close sales.
Oetken rejected the idea that Im, who was co-head of Nomura’s commercial mortgage-backed securities (CMBS) desk before leaving the bank in December 2014, was, as the judge put it, “just a salesman haggling for a good deal.”
Matthew Ingber, a lawyer for Im, did not immediately respond to requests for comment.
Im is one of at least 11 individuals, including six from Nomura, to face civil or criminal charges in a more than five-year federal crackdown into deceptive bond trading practices.
Another former co-head of Nomura’s CMBS trading desk, Kee Chan, settled with the SEC in May.
Deutsche Bank AG and Benjamin Solomon, a former head trader on that bank’s CMBS desk, settled separate SEC charges over bond prices on Monday.
Oetken said Im had made a “fairly strong” argument that the fact he told a counterparty about his alleged misstatements showed that his practice was commonplace and not fraudulent.
But the judge said the SEC offered “strong circumstantial evidence of conscious misbehavior or recklessness,” pointing to an alleged electronic conversation that Im had, after lying to a customer about prices, with a trader who had sold him the bonds.
Im: he paid 78-24
Im: i told him i [bought] at 78-8 actually
Seller: nice one.
The case is SEC v Im, U.S. District Court, Southern District of New York, No. 17-03613.
Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman