Ex-Jefferies Trader’s Customers Say Lies Part of the Job
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Ex-Jefferies & Co. trader Jesse Litvak’s former customers told a jury during his fraud trial in Connecticut that lies and misrepresentations are a common part of the give-and-take of bond trading.
Litvak, 39, is on trial in New Haven federal court accused of defrauding investors of $2 million by lying on trades of mortgage-backed securities. He’s the only person charged with fraud in connection with an initiative to distribute more than $20 billion from the Troubled Asset Relief Program, which the U.S. government created during the 2008 credit crisis to help bail out banks.
Joel Wollman, a portfolio manager with QVT Financial LP, testified yesterday that he told Litvak that his firm’s limit for a bond purchase was 57 cents on the dollar because anything more than that wouldn’t provide a 10 percent yield.
Under cross-examination from John Hillebrecht, one of Litvak’s attorneys, Wollman admitted he told another broker that he’d get a 10 percent yield at 58 cents on the dollar, and that he wasn’t telling the whole truth to Litvak. The charges against Litvak include claiming that a third party was selling the bonds when Jefferies was the actual holder.
“Volunteering information would not give me an edge, keeping information would give me an edge,” Wollman said.
Lying, Deals
“My lying is part” of making deals, he said, “although I generally consider myself a truthful person.”
Pools of home loans securitized into bonds were a central part of the housing bubble that burst, helping send the U.S. into the biggest recession since the 1930s. The largest global banks lost billions of dollars on mortgage-backed debt as U.S. home prices plunged and the market for such assets dried up.
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