Bank to pay $25m over mortgage probe

An investment bank has agreed to pay $25 million to settle civil and criminal investigations into its trading of mortgage-backed securities in the wake of the financial meltdown

An investment bank has agreed to pay $25 million to settle civil and criminal investigations into its trading of mortgage-backed securities in the wake of the financial meltdown.

Jeffries Group LLC agreed to a non-prosecution agreement with the U.S. Attorney’s Office, according to a Bloomberg report. The bank will pay $11 million to parties harmed by the trades, $10 million to the U.S. Attorney’s Office and $4 million to resolve a second probe by the Securities and Exchange Commission, Bloomberg reported.

Jeffries said the probes “arose from a matter that came to light in late 2011, at which time we terminated a mortgage-backed securities trader who was then indicted.”

The company’s former managing director, Jesse Litvak, was arrested in January of 2013 on charges that he bilked customers on more than $2 million in trades of residential mortgage-backed securities between 2009 and 2011, Bloomberg reported. Prosecutors allege that Litvak misrepresented sellers’ asking prices to buyers and kept the difference for the bank. Among Litvak’s alleged victims were six investment funds established by the Treasury Department in response to the financial crisis, Bloomberg reported.

Federal investigators are currently probing possible trading abuses at other large lenders, including JPMorgan Chase and UBS, according to Bloomberg.