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Jefferies Investigated By SEC For Mortgage Security Fraud

valuewalk.com | March 13, 2014

By Clayton Browne

SEC to expand Jefferies mortgage securities fraud investigation

The federal investigations into possible mortgage securities fraud in the 2007-2010 period continue, and are not limited to financial institutions. The Securities and Exchange Commission announced today that they have expanded their investigation into alleged fraud over mortgage-backed securities at Jefferies Group LLC (NYSE:JEF). The SEC claims Jefferies inadequately supervised its mortgage-backed securities traders during the financial crisis of 2008 to 2011.

Jefferies Group LLC (NYSE:JEF) has a policy requiring trading desk supervisors to review electronic communications of traders and salespeople to catch and flag incorrect information given to customers. However, the SEC alleges that Jefferies supervisory employees willfully ignored or insufficiently implemented the review policy.
Statement from SEC

The SEC pulled no punches in its statement. “Had Jefferies better targeted its supervision to the risks faced by its mortgage-backed securities desk, many of the misstatements made by its employees could have been caught,” commented Andrew J. Ceresney, director of the SEC’s Division of Enforcement.

Jefferies' Trader Litvak Case

Former Jefferies trader Jesse Litvak was found guilty of violating federal securities laws in a trial decided just last week. Litvak was accused of intentionally telling customers incorrect information regarding the prices of residential mortgage-backed bonds he was trading and keeping the difference.

Jefferies Group LLC (NYSE:JEF) also recently accepted a settlement with the SEC to avoid prosecution in the Litvak case. The company agreed to pay a $25 million fine but admit no guilt in order to resolve investigations regarding Mr. Litvak.

Feds continues to investigate banks for mortgage securities fraud

The SEC and the special inspector general for the Troubled Asset Relief Program announced back in January that have begun a new investigation of potential intentional mispricing of mortgage securities by several big banks from 2009 to 2011. According to the Wall Street Journal, the feds are investigating “significant misrepresentations” regarding some mortgage assets made by several major banks.

 

Back to March 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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