Investor Lawyers Blog
Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in mortgage-backed securities. The investigations are concerning full-service brokerage firms that may have failed to properly supervise their traders and/or gave false pricing information to investors.
Recently, Jefferies LLC agreed to settle charges with the Securities and Exchange Commission (“SEC”) by paying $25 million for allegedly failing to adequately supervise traders regarding mortgage-backed securities. In addition, authorities believe some of the Jefferies staff may have lied to investors regarding pricing. The alleged supervisory failures took place between 2009 and 2011. An SEC investigation reportedly found that Jefferies had lied to customers about the prices that hte firm piad for certain mortgage-backed securities that it later sold to customers, thus misleading the customers concerning the “markups” or trading profits received by Jefferies in connection with the sales.
The SEC argued that supervisors at Jefferies could not properly supervise trading activity with what they were given by the investment bank, and that they did not find out what customers were being told regarding what prices were paid by the bank for certain securities and whether or not this information was accurate. While the bank’s policy required supervisors to view electronic conversations, Jefferies has been accused of failing to review conversations on Bloomberg terminals, and the SEC contends that even when conversations were reviewed, the policy did not ensure that misrepresentations in price would be identified.