By Jonathan Stempel
NEW YORK (Reuters) - A former co-head of Nomura Holdings Inc's (T:8604) commercial mortgage-backed securities desk was charged by a U.S. regulator on Monday with fraud for lying to customers about bond prices, in order to boost profit.
The U.S. Securities and Exchange Commission said Kee Chan, a former Nomura managing director, "deliberately misled and lied to customers" on numerous occasions from 2010 to March 2012, including by making up "colorful but entirely fictitious exchanges" with customers on the other side of the trades.
Chan, 46, of Manhasset, New York, generated hundreds of thousands of dollars of ill-gotten profit, thereby boosting his own bonuses, the SEC said in its complaint filed in Manhattan federal court.
It was unclear whether Chan has hired a lawyer.
Chan could not immediately be reached for comment. Nomura declined to comment.
The case is part of a crackdown on deceptive bond trading practices, overseen mainly by the office of U.S. Attorney Deirdre Daly in Connecticut.
At least eight people have been criminally charged, including former Nomura traders Michael Gramins, Tyler Peters and Ross Shapiro, who went on trial last week in Hartford, Connecticut.
Three of the eight are cooperating with federal prosecutors. The first to be charged, former Jefferies Group managing director Jesse Litvak, was sentenced last month to serve two years in prison following his conviction.
According to brokerage industry records, Chan worked at Nomura from August 2009 to June 2012, and at UBS Group AG (S:UBSG) from September 2012 until he was fired in February 2016.
UBS terminated him because he was too slow to disclose that Daly's office was investigating him in connection with his trading at Nomura, the records show.
A spokesman for Daly had no immediate comment. UBS did not immediately respond to requests for comment.
The case is SEC v Chan, U.S. District Court, Southern District of New York, No. 17-03605.