On September 8, 2015, the Securities and Exchange Commission (“SEC”) charged Ross Shapiro, Michael Gramins, and Tyler Peters with violating Section 10(b) of the Securities and Exchange Act of 1934, and Rule 10b-5 and Sections 17(a) of the Securities Act of 1933. The SEC alleges Ross Shapiro, Michael Gramins, and Tyler Peters defrauded customers by misrepresenting the bids and offers provided to Nomura Securities International, the brokerage firm who had employed them, for residential mortgage-backed securities (“RMBS”). Ross Shapiro, Michael Gramins, and Tyler Peters also misrepresented the prices at which Nomura Securities International bought and sold RMBS, as well as the spreads earned by intermediating RMBS trading. Ross Shapiro, Michael Gramins, and Tyler Peters were able to execute such deception because the RMBS market was not transparent and the pricing information was difficult to determine. Ross Shapiro, Michael Gramins, and Tyler Peters also invented fictitious third-party sellers and offers for bonds that were already owned by Nomura Securities International. In addition to their own unlawful conduct, Ross Shapiro, Michael Gramins, and Tyler Peters also encouraged junior traders at the firm to act in concert with them.
As a result of Ross Shapiro’s, Michael Gramins’, and Tyler Peters’ actions, the SEC alleges that Nomura Securities International generated at least $5 million in revenue and an additional $2 million in profits. Further, during the period of wrongdoing, and due to the perceived success of Ross Shapiro, Michael Gramins, and Tyler Peters, Nomura Securities International paid total compensation of $13.3 million to Ross Shapiro, $5.8 million to Michael Gramins, and $2.9 million to Tyler Peters.
The SEC has also entered into Deferred Prosecution Agreements with three other individuals who have cooperated with the investigation and provided critical evidence that would have been unavailable to the SEC’s enforcement team.
Michael Osnato, Chief of the SEC’s Complex Financial Instruments Unit, stated, “[t]he SEC is open to deferring charges based on certain factors, including when cooperators come forward with timely and credible information while candidly acknowledging their own misconduct. The decision to defer charges in this matter reflects the early and sustained assistance provided by these individuals.”
Andrew Ceresney, Director for the SEC’s Enforcement Division, stated, “[t]he alleged misconduct reflects a callous disregard for the integrity and obligations expected of registered securities professionals. Not only did these traders lie to their customers, but they created a corrupt culture on Nomura’s trading desk by coaching more junior traders to employ the same deceptive and dishonest trading practices we allege in our complaint.”
In addition to the SEC’s continuing investigation, the United States Attorney’s Office for the District of Connecticut announced criminal charges against Ross Shapiro, Michael Gramins, and Tyler Peters.
The attorneys at Lax & Neville LLP have extensive experience in successfully prosecuting and defending claims on behalf of customers who have suffered losses. If you are a victim of fraud, please contact Lax & Neville LLP today at (212) 696-1999 to schedule a consultation.