Linus Unah – Fourth Estate Contributor
Washington, DC, United States (4E) – A federal court in New York has ordered one of the former two head traders on Nomura Securities International ‘s commercial mortgage backed securities or CMBS desk in New York to pay more than $200,000 for federal securities laws violations.
The trader, Kee Chan, 46, is a resident of Manhasset in New York and was associated with Nomura as a registered representative from August 2009 through June 2012.
During this time, Chan acted as an intermediary on trades with Nomura’s customers who sought to buy and sell CMBS on the secondary market, with Nomura buying the CMBS from one customer and then selling the same CMBS to another customer at a higher price.
On numerous occasions from 2010 through March 2012, the SEC said Chan deliberately misled and lied to customers about the prices at which Nomura had bought or sold the securities, the bids and offers that
Nomura made or received on the securities, and the compensation that Nomura would receive for intermediating the trades, as well as who owned the security.
In at least one instance, Chan went so far as to alter and then forward to a customer an internal Nomura email in order to “corroborate” his lie about what he had bid for the security.
The SEC noted that Chan defrauded investment advisers and other fund managers that were trading CMBS on behalf of clients as well as financial institutions that were trading CMBS for their own proprietary accounts.
Through his fraudulent conduct, Chan generated hundreds of thousands of dollars in additional, ill-gotten trading profits for the CMBS desk, which thereby increased his own compensation.
Chan received discretionary bonuses during the relevant period that were based, in part, on the performance of the CMBS desk
Honorable Loretta A. Preska of a New York federal court entered a final consent judgment requiring Chan to repay $51,965 as well as an $11,758 in prejudgment interest and a $150,000 civil monetary penalty.
The SEC’s separate case against defendant James Im, Chan’ co-head at the desk, continues.
The SEC charged Im and Chan, who ran the commercial mortgage-backed securities (CMBS) desk at Nomura Securities International Inc., with deliberately lying to customers in order to inflate the profits of the CMBS desk and line their own pockets as a result.
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