A former executive at Nomura, a financial holding company based in Japan, was found guilty of conspiracy on Thursday by a Connecticut jury. The defendant, Michael Gramins, allegedly added secret commission fees onto mortgage-backed security transactions he handled between 2009 and 2013, according to the verdict.
Gramins wasn’t the only party involved—though he was the single person charged. The state’s case also named Nomura’s Ross Shapiro and Tyler Peters in the suit, which alleges the three defendants illegally added to their profit margins when handling RMBS transactions for their employer.
Specifically, the suit claims the trio made “secret and unearned compensation” off customers—particularly Alliance Bernstein LP and Hartford Investment Management Co. The state’s Attorney General’s office filed the case back in September 2015.
While at Nomura, Gramins and Peters served as executive directors, while Shapiro was a managing director. During this time, Shapiro’s attorney told the jury, “margin padding” was common practice. He also argued that the customers in question would have purchased the bonds regardless of the added fee.
In addition to one conspiracy charge each, Gramins, Peters, and Shapiro were also charged with two counts of securities fraud and six counts of wire fraud. The jury was hung on the one conspiracy count against Shapiro, as well as two fraud counts against Gramins. A mistrial was declared on all three hung counts.
On all the remaining counts, the jury found the defendants not guilty, and Peters was acquitted of all charges against him.
Law360 talked to Marc Mukasey, Gramins’ attorney, about the case.
"The government failed to convict Mike on eight of nine counts, including six counts on which he was outright acquitted,” Mukasey told Law360. “In light of these results, we are eager to argue the post-trial motions on the lone count of conviction.”
The Connecticut Attorney General’s office is currently pursuing a similar case against David Demos, a former trader for Cantor Fitzgerald, a capital market investments brokerage. Two other Nomura employees were also named in a suit filed by the U.S. Securities and Exchange Commission in May.