Nomura traders ‘won’t testify at fraud trial

Bloomberg

Three former Nomura Holdings Inc. mortgage-bond traders accused of cheating their customers called no witnesses in their defense against fraud charges, betting that prosecutors’ evidence is too weak to convict them.
Lawyers for the three traders — Ross Shapiro, Michael Gramins, and Tyler Peters — have said they will
tell jurors that the prosecution
failed to prove its case beyond a reasonable doubt and, in fact, some of government’s witnesses helped their clients. None of the defendants took the stand.
The government rested its case in Hartford, Connecticut, after presenting eight witnesses, including former Nomura junior traders who said they were trained to lie in bond negotiations and customers who testified they had been duped. Closing arguments are expected to begin later this week, and jurors may begin deliberating by the end of the week.
The trio are among more than a half-dozen bond professionals who have been charged with misrepresenting prices to customers. The crackdown on abuses in the bond market began with the arrest of former Jefferies LLC managing director Jesse Litvak in January 2013. Litvak was sentenced last month to two years in prison.
Attorneys for the ex-Nomura traders have contended that their clients were negotiating with highly sophisticated professionals who consulted their own models when deciding whether to trade and only pulled the trigger when the price was right.
Guy Petrillo, an attorney for Shapiro, said earlier in the trial that Nomura’s customers got the “best available price” during the deals at issue, receiving the exact bonds they sought.
“No one was bamboozled or snookered,” Petrillo said. “All of the buying and selling was done by some of the most financially successful hedge-fund and money-management firms in the world, each managing billions of dollars.”
Defense attorneys were also able
to prompt a government witness from firms who traded with the Nomura trio to admit he used similar tactics at times.
“I may make the choice of lying to that person if I thought it was protecting my clients’ interest,” said Zachary Harrison, former Putnam Investments LLC portfolio manager, who testified that he was shortchanged by Nomura traders lying.