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Former Nomura trader avoids prison, in defeat for U.S. in bond sales probe

Jonathan Stempel
·2 min read

By Jonathan Stempel

Dec 17 (Reuters) - A former Nomura Holdings Inc trader has avoided prison after being convicted of lying to customers about bond prices, in a defeat for U.S. prosecutors in their largely unsuccessful eight-year crackdown on improper sales tactics.

Michael Gramins, 38, was sentenced on Thursday to two years probation by U.S. District Judge Robert Chatigny in Hartford, Connecticut.

The sentence means prosecutors failed to win convictions and prison terms that survived the appeals process against any of the eight traders criminally charged with cheating customers on bond trades following the 2008 financial crisis.

Jesse Litvak, formerly of Jefferies Group and the only other trader convicted, had his conviction overturned in May 2018.

Gramins was accused of lying and training subordinates to lie to asset managers, hedge funds and insurers in the "opaque" residential mortgage-backed securities market.

Prosecutors said Gramins induced customers to buy bonds at inflated prices or sell bonds at depressed prices, hoping to boost Nomura's profit and his own pay.

Chatigny, however, said that while Gramins "lied time after time, transaction after transaction, spanning a long period of time, ... his conduct was aberrational."

The judge also said the married father of two had been punished "severely" enough, including losing his career in financial services, without the "substantial" prison term prosecutors sought.

Gramins' lawyer Marc Mukasey said in an email: "We are thrilled with the judge's decision. Justice prevails."

A spokesman for U.S. Attorney John Durham in Connecticut declined to comment.

Jurors convicted Gramins in June 2017 on a conspiracy count, while acquitting him or deadlocking on eight other counts.

Chatigny set aside the conviction a year later, finding that some testimony had been improper. The federal appeals court in Manhattan reinstated the conviction in Sept. 2019.

Without admitting wrongdoing, Nomura agreed in July 2019 to pay $26.5 million to settle Securities and Exchange Commission charges over its supervision of Gramins and other traders.

The case is U.S. v. Gramins, U.S. District Court, District of Connecticut, No. 15-cr-00155. (Reporting by Jonathan Stempel in New York Editing by Chizu Nomiyama)