Ex-Jeffries trader sentenced to 24 months for RMBS fraud

Jesse C. Litvak, a former senior trader and managing director at Jeffries & Co., was sentenced to 24 months of imprisonment, followed by three years of supervised release, for engaging in fraudulent residential mortgage-backed securities (RMBS) trades. In January, he was found guilty on one count of securities fraud and not guilty on nine counts of securities fraud in a retrial held in U.S. District Court in New Haven.
Litvak was originally convicted in March 2014 on 10 counts of fraud related to trading in residential mortgage-backed securities, one count of fraud connected to the federal Troubled Asset Relief Program (TARP) and three counts of making false statements to the government. In December 2015, the U.S. Court of Appeals for the Second Circuit reversed the convictions on TARP fraud and making false statement charges and remanded the securities fraud charges for a new trial.
“This sentence sends an unequivocal message that fraud in the residential mortgage backed securities trading market will be met with serious punishment,” said Deirdre M. Daly, U.S. attorney for the District of Connecticut. “Jesse Litvak took advantage of his victims through his repeated and brazen lies, and as the court correctly found, Litvak”™s lies led to more than $6 million in unearned profits for his employer. Simply put, Litvak lied to investors to cheat them and make more money for himself. This has been a demanding and lengthy prosecution.”