Amid SEC Suit, Former Nomura Trader Admits Lying to Clients

Amid SEC Suit, Former Nomura Trader Admits Lying to Clients
  • A former Nomura Holdings Inc NMR senior trader admitted lying to clients about bond prices but said it was a common practice and never impacted clients’ investment decisions.
  • James Im, who led Nomura’s commercial mortgage-backed securities trading desk from 2009 to 2014, took the stand in his defense against the Securities and Exchange Commission suit, accusing him of lying to boost the firm’s profits and bonus Bloomberg writes.
  • Under questioning by his lawyer, Im testified that he sometimes misled clients about the prices at which Nomura had bought or sold bonds or pretended he was negotiating with a fictitious third party. 
  • “The lie about who owned that bond was to avoid an uncomfortable conversation and not appear as the stickler on price,” Im said. “It was easier to deflect that and say there was a third party that owned it and not me.”
  • But he said his clients also lied to him about prices. According to Im, their mutual fibbing never impacted investment decisions because it did not affect the value of the collateral underlying the bonds. 
  • Nomura agreed to repay customers $25 million in July 2019 to resolve claims that it failed to supervise traders who made false statements while negotiating sales of mortgage securities. 
  • The SEC is seeking to force Im to disgorge his alleged gains and pay an unspecified monetary penalty. 
  • Im made $3.79 million in discretionary bonuses during the period when the agency says the activity occurred.
  • Price Action: NMR shares closed at $3.78 on Monday.
  • Photo via Wikimedia Commons

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