On October 3, 2018, the Securities and Exchange Commission obtained a final judgment against Ross B. Shapiro, the former head of the residential mortgage backed securities (“RMBS”) trading desk at Nomura Securities International (“Nomura”) in New York, in an action alleging fraud in trading mortgage-backed securities.
The SEC complaint, filed on September 8, 2015, alleges that Shapiro made misrepresentations and omitted material information to investors in order to illicitly generate additional revenue for Nomura’s RMBS desk. Shapiro allegedly misrepresented the bids and offers provided to Nomura for RMBS, the prices at which Nomura bought and sold RMBS, and the spreads the firm earned for intermediating trades. Customers sought and relied on market price information from these traders because the market for RMBS is opaque and accurate price information is difficult to determine. In addition, the SEC alleged that Shapiro coached and directed other traders to engage in similar misconduct.
The SEC’s complaint charged Shapiro with violations of Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. The final judgment permanently enjoins Shapiro from violating these antifraud provisions of the federal securities laws and orders Shapiro to pay a $200,000 civil penalty. On October 10, 2018, the SEC issued an administrative order barring Shapiro from associating with any broker-dealer or investment adviser and participating in any offering of a penny stock, with a right to reapply for securities industry licenses after two years. Shapiro consented to the entry of the final judgment and administrative order against him without admitting or denying the charges.
This settlement fully resolves the charges against Shapiro. The civil case remains pending against two defendants who traded RMBS at Nomura, Michael Gramins and Tyler Peters.
The SEC’s litigation was handled by Rua Kelly, Al Day, Marty Healey and Celia Moore of the Boston Regional Office.