Prosecutors drop fraud case against former Jefferies Group mortgage-bond trader

Jesse Litvak had been charged with lying to clients about mortgage-bond prices

By Francis Monfort

31 Jul 2018

The five-year ordeal of a mortgage-trader accused of employing fraudulent tactics has come to an end after prosecutors dropped the case against him, according to a Bloomberg report.

Jesse Litvak, formerly a managing director at Jefferies Group, became the first person charged for questionable bond-trading tactics after federal authorities cracked down on the practice. His 2013 arrest caused a ripple effect through Wall Street, with dozens of traders resigning or being suspended.

Accused of lying to his clients about the prices of mortgage bonds during trade negotiations, Litvak was convicted twice by juries in Connecticut. However, the Second Circuit Court of Appeals in both instances tossed the convictions on technical legal grounds, despite finding that the verdicts were supported by evidence.

Litvak had already served more than seven months of a two-year sentence when he was released from a Florida prison in May.

Connecticut US Attorney John Durham asked the judge to throw out one remaining count against Litvak based on the appeals rulings.

"In light of the totality of the circumstances unique to this case, the government has concluded that the interests of justice would not be served by a third trial,” he wrote in a court filing. The request must still be approved by a judge.