When Can Traders Lie? Nomura Case's Mixed Verdict: QuickTake Q&A
Pedestrians are reflected in a puddle while passing in front of the New York Stock Exchange.
Photographer: Michael Nagle/BloombergA federal jury in Hartford, Connecticut returned mixed verdicts in a fraud trial involving three former mortgage-bond traders who had worked for Nomura Holdings Inc. The case drew broad attention because of the unusual questions it raised: When is it all right to deceive a customer, and when is it not? How big does a lie have to be to be a fraud? Is it OK to lie if you assume your customer assumes you’re lying, because everybody lies?
Ross Shapiro, Michael Gramins and Tyler Peters were accused of lying to customers about the prices of mortgage-backed securities, and training subordinates to do the same, in order to boost their compensation. Gramins was convicted of conspiracy but acquitted of six fraud counts, while the jury was hung on two other charges. Peters was cleared of all charges. Shapiro was cleared of eight counts but the jury deadlocked on one. Prosecutors must decide whether to retry Shapiro and Gramins on the deadlocked charges.