SEC v. Jesse C. Litvak, Case No. 3:13-cv-00132 (D. Conn.). On January 28, 2013, the SEC announced fraud charges against Jesse Litvak, a former executive at broker-dealer Jeffries & Co. The SEC alleges that Litvak arranged trades for customers as part of his job as a managing director on the mortgage-backed securities (“MBS”) desk at Jefferies. He would buy MBS from customers and sell them to others. He lied about the price at which he bought the MBS so he could sell it to the other customer at an artificially high price and then keep more money for the firm. Litvak also defrauded purchasers by creating fictional MBS sellers when in fact he was just selling MBS out of his firm’s inventory at a higher price. According to the SEC, Litvak generated more than $2.7 million in additional, improper revenue for Jefferies through his misconduct. The SEC charged Litvak with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act. The U.S. Attorney’s Office for the District of Connecticut today announced criminal charges against Litvak related to the same conduct.
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