In two mortgage-backed securities settlements reached with the US Securities and Exchange Commission (SEC), Nomura Securities International will collectively pay customers about $25M. The enforcement actions involve residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS), respectively.
According to the SEC, Nomura failed to properly supervise its bond traders, who are accused of making statements that were false and misleading to customers by trying to get them to buy RMBS and CMBS. This purportedly included providing misleading information about:
- How much Nomura had paid for the securities.
- How much the firm stood to make on potential trades by customers.
- Who the current owners of the RMBS and CMBS were at the time. Traders allegedly pretended that Nomura was still in negotiations with a third-party seller even though the firm had already purchased the securities.
- The Commission also believes that the firm’s compliance and surveillance procedures were inadequate, which prevented it from being able to identify the alleged misconduct by the its own traders.
In 2017, the regulator filed charges against ex-Nomura traders Kee Chan and James Im, accusing them of misrepresenting CMBS price information to firm customers. Two years before that, the SEC accused former Nomura traders Ross Shapiro, Tyler Peters, and Michael Gramins of lying to customers about RMBS pricing so that not only did they allegedly defraud customers, but also they caused millions of dollars of their funds to become illicit revenue for Nomura. Meantime, the three New York-based brokers made millions of dollars in bonuses.
To settle the inadequate supervision charges, Nomura agreed to censures related to both SEC cases and will pay back to customers the total amount that it made on CMBS and RMBS trades in which misrepresentations were made–that’s more than $4.2M to customers that purchased CMBS and more than $20.7M to those that bought RMBS. Nomura will also pay $1.5M in penalties related to the two cases.
Mortgage-Backed Securities Cases
Our mortgage-backed securities fraud lawyers work with investors that have lost money due to RMBS fraud, CMBS fraud, and MBS fraud. Contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) so we can provide you a free, no obligation initial case consultation.